Morgan Stanley downgrades Williams-Sonoma, states stock might fall another 18% as need for furnishings compromises
Expect more disadvantage ahead for Williams-Sonoma ‘s stock as need for furnishings compromises in a tough macro environment, according to Morgan Stanley. Analyst Simeon Gutman devalued the stock to underweight from equivalent weight, stating in a note to customers Monday. The expert likewise slashed his cost target on the stock to $100 from $150. The brand-new target suggests disadvantage of approximately 18% from Friday’s close. “Earnings revisions could turn sharply negative in ’23 as the impacts of reversion, recession & normalizing promotions appear underestimated, even at the stock’s current discounted valuation,” Gutman stated, keeping in mind that he’s modeling incomes per share for the 2024 33% listed below agreement expectations. Earlier this month, Williams-Sonoma reported third-quarter sales and revenue that exceeded expert expectations. However, the business stopped working to repeat or upgrade its outlook for the 2024 , mentioning financial unpredictabilities ahead. Going forward, Gutman sees a variety of macro-related problems for Williams-Sonoma, anticipating furnishings to decrease by 6% to 7%, discretionary costs to fall and deflation to return in 2023. Williams-Sonoma shares have actually fallen more than 27% in 2022. “Though WSM’s higher-income customer provides some insulation, in aggregate we think these headwinds mean the category likely declines and comps should turn more sharply negative in ’23,” he stated. “The timing and magnitude of EPS cuts could be greater than expected, and valuation is likely to be pressured until there is more clarity on the earnings/margin trough,” Gutman stated. — CNBC’s Michael Bloom contributed reporting
