Analyst upgrades are usually a sign of a stock doing well. However, investors didn’t feel that way about Williams-Sonoma (NYSE:WSM). The home goods retailer briefly took a fractional hit in share prices in the closing minutes of Thursday’s trading, even as multiple analysts came out in support. But that hit didn’t last as Williams-Sonoma finished out the day up. Indeed, Williams-Sonoma managed to land upgrades from Morgan Stanley and Goldman Sachs. Moreover, several others—ranging from Evercore to Telsey to Wedbush—hiked their price targets on the stock, even if they left their ratings where they were.
Morgan Stanley, via analyst Simeon Gutman, noted that Williams-Sonoma was putting up an “…ability to generate operating leverage against a tepid demand backdrop.” This, coupled with “…solid expense control and structural margin drivers,” made Williams-Sonoma an attractive proposition, causing him to upgrade it from Underweight to Equal-Weight. Goldman Sachs, meanwhile, bumped the rating up from Sell to Neutral, citing margins and improvements in freight costs.
And That Wasn’t All
The support of analysts was definitely welcome, but it comes after an even bigger win just yesterday that likely explains why it lost a bit of ground today. Yesterday, the firm brought out its earnings report, delivering some absolutely killer beats. That gave Williams-Sonoma room to hike its dividend a full 26%, which actually put its yield above that of the S&P 500.
And then, as if that weren’t good news enough for anyone, WSM announced a stock buyback plan fueled by a whopping $1 billion, all of which combined pushed Williams-Sonoma to record share prices.
Is Williams-Sonoma a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on WSM stock based on four Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 143.8% rally in its share price over the past year, the average WSM price target of $243.56 per share implies 14.45 downside risk.
