- Jefferies analyst Jonathan Matuszewski downgraded Williams-Sonoma, Inc (NYSE: WSM) from Hold to Underperform and cut the price target from $160 to $100.
- As a discretionary retailer serving upper-middle income consumers whose EBIT% is 2x versus FY19 thanks partly to over-earning, he saw WSM shares underperforming ahead of a softer macro.
- Based on recessionary category performance, JEF comps were cumulative ~600 bps below Street through FY26.
- Based on rising promos, the Street gross margin is 50-60 bps too high in FY24 + FY25.
- Williams-Sonoma is a "poster child" for retailers that have over-earned during the pandemic, he wrote.
- Matuszewski saw deteriorating demand for discretionary durable goods beginning now and worsening in 2023 amid weakening macro conditions.
- He saw that B2B P&L benefits would likely stall as commercial clients cut back.
- While the industry is fragmented, he thought investors underestimated share shifts.
- Price Action: WSM shares traded higher by 2.83% at $120 on the last check Tuesday.
| Mar 2022 | Wells Fargo (NYSE:WFC) | Maintains | Equal-Weight | |
| Feb 2022 | Gordon Haskett | Upgrades | Hold | Accumulate |
| Jan 2022 | RBC Capital | Upgrades | Sector Perform | Outperform |
View the Latest Analyst Ratings
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.