Analysts Impressed With Williams-Sonoma's Execution, But Not Enough To Move From The Sidelines

Williams-Sonoma, Inc. WSM reported its third-quarter earnings in-line with expectations and raised the low end of its guidance for 2019.

The Analysts

KeyBanc Capital Markets analyst Bradley Thomas maintained a Sector Weight rating on Williams-Sonoma.

Wedbush analyst Seth Basham reiterated a Neutral rating while raising the price target from $63 to $67.

The Thesis

Williams-Sonoma reported quarterly adjusted earnings at $1.02 per share, meeting the consensus estimate. Comparable brand revenue of 5.5% came in better than the Street estimate of 5.0%.

The company raised the low end of its full-year earnings guidance range by 5 cents to $4.65-$4.80 per share. with the low end of comparable brand growth up 0.5% from prior guidance to 3.5-6.0%.

The third-quarter results were supported by strong sales growth and disciplined expense control, KeyBanc’s Bradley Thomas noted. He added that this could continue to drive earnings upside moving ahead.

Analyst Thomas expressed concern, however, regarding the industry being “highly competitive,” noting this as the reason for being on the sidelines.

Williams-Sonoma has witnessed sales momentum into the fourth quarter and could achieve the high end of its full-year earnings guidance, Wedbush’s Seth Basham said.

“Tariff-related uncertainty and a less robust SG&A outlook in 2020 keep us sidelined,” analyst Basham wrote.

Price Action

Shares of Williams-Sonoma were down 2.94% to $66.72 at the time of publishing on Friday.