Vivien Killilea/Getty Images for Caruso Affiliated
stock rose Thursday, helped in part by a price target increase from Telsey Advisory Group. The firm is confident that demand for home furnishings won’t end when the pandemic does.
Analyst Cristina Fernández reiterated an Outperform rating on Williams-Sonoma (ticker: WSM) and raised her target to $195 from $175. In recent discussions with Chief Executive Officer
Laura Alber,
the analyst writes, the CEO “sounded confident about the sustainability of home furnishings demand in 2021.”
Williams-Sonoma stock has risen 76% so far this alone, and is up 375% in the past 12 months. The shares got a boost from the Covid-19 pandemic, with a huge increase in sales. Some skeptics, however, have wondered how that momentum will fare in a post-pandemic world.
Yet Fernández argues that those worries are unfounded. During its most recent conference call, Williams-Sonoma said that quarter-to-date trends remained strong—echoing similar messages from both high-end rivals like RH (RH) and lower-end competitors, like
(HOME). High demand with tight inventory should keep promotions to a minimum in the industry, while Williams-Sonoma specifically can benefit as it expands into new categories, like baby and outdoor furnishings.
The company will also see savings from renegotiated leases, Fernández writes, while a more permanent shift to digital shopping in the sector plays into Williams-Sonoma’s strengths. About 70% of its sales were online last year. The company’s core, higher-income consumer remains in good financial shape, while a continuing strong housing market and general shift to the suburbs should continue to fuel sales even as the pandemic wanes, she adds.
Although the stock could waiver near-term as investors try to handicap the pace of the economic reopening, Williams-Sonoma is “one of the companies emerging from the pandemic stronger and with greater market share,” the analyst concludes.
Williams-Sonoma is up 1.1% to $181.12 in recent trading.
Write to Teresa Rivas at teresa.rivas@barrons.com
