Market Overview

Morgan Stanley Turns Bearish On Williams-Sonoma, Expects Pressures To Intensity

Share:
Morgan Stanley Turns Bearish On Williams-Sonoma, Expects Pressures To Intensity

Specialty retailer Williams-Sonoma, Inc. (NYSE: WSM) faces multiple headwinds in 2019, which is likely to lead an acceleration in margin deterioration along with greater top-and-bottom line pressure, according to Morgan Stanley.

The Analyst

Morgan Stanley's Simeon Gutman downgraded Williams-Sonoma from Equal-weight to Underweight with a price target lowered from $55 to $49.

The Thesis

Among the multiple brands under the company's portfolio, the core Williams-Sonoma brand and West Elm continue to perform well, Gutman said in the note. But the Pottery Barn brand, which accounts for around 55 percent of total revenue, has bounced between negative and positive comps over the past three years and Morgan Stanley's proprietary survey now points to a poor outlook.

The firm's November 2018 "AlphaWise Home Furnishing" survey found a decrease in customer visits to Pottery Barn along with a drop in intent to purchase at Pottery Barn as well as Williams Sonoma and west elm. As such, the Pottery Brand is likely to post "anemic" results in 2019, which will make it difficult for the company to leverage expenses.

Williams-Sonoma also faces macro headwinds as it could be more negatively impacted to potential tariffs than other retailers. In addition, the research firm's survey also found the company is among the worst positioned to navigate through a potential recession.

Price Action

Shares of Williams-Sonoma were trading lower by 1.7 percent at $51.59 Wednesday afternoon.

Related Links:

Morgan Stanley Upgrades Walmart, Says Premium Valuation Is Justified

How The 'Fading' Pottery Barn Brand Impacts Williams-Sonoma

Latest Ratings for WSM

DateFirmActionFromTo
Dec 2019ReiteratesBuy
Nov 2019MaintainsUnderweight
Nov 2019Initiates Coverage OnOverweight

View More Analyst Ratings for WSM
View the Latest Analyst Ratings

Posted-In: Morgan Stanley Pottery Barn retailers Simeon GutmanAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (WSM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
TOLGoldman SachsInitiates Coverage On42.0
KBHGoldman SachsInitiates Coverage On36.0
YEXTSunTrust Robinson HumphreyMaintains28.0
LHCGSunTrust Robinson HumphreyMaintains160.0
DLRSunTrust Robinson HumphreyMaintains140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Prologis Injects Some Cautious Prudence Amid Strong 2018 Results

JPMorgan Upgrades Logitech After Q3 Beat-And-Raise