Analysts Lukewarm On Williams-Sonoma

Williams-Sonoma, Inc.'s (NYSE: WSM) long-term earnings growth story remains intact but the company faces tempered investor expectations for 2015, analysts said Thursday.

The specialty retailer closed down nearly 3 percent at $79.42 after posting a disappointing 2015 outlook partly because of a West Coast port slowdown that has tied up merchandise.

The company forecast 2015 earnings of $3.35 to $3.45 a share, versus the Wall Street consensus of $3.64.

"Given the stock's premium valuation, there's little room for error," said RBC's Scot Ciccarelli, who maintained a rating of Sector Perform and $76 target.

The outlook suggests 2015 earnings growth of between 8 percent and 12 percent, roughly in-line with the company's average growth rate of 12.3 percent over the past three years.

"We appreciate their track record, but this does suggest the consensus needs to come down," Deutsche Bank's Michael Baker said of the company's outlook.

Baker maintained a Hold rating but raised his price target 7 percent to $74, and said a recent acceleration in customer deposits suggests faster growth in same-store sales during coming quarters.

Despite the lower-than-expected guidance, "we heard nothing that derails the longer-term story," Morgan Stanley's Simeon Gutman said. Excluding the drag from the West Coast port issue, "the earnings and outlook were fine."

But Gutman maintained a Hold rating and $84 target, calling the company's valuation "not particularly compelling."

Barclay's Alan M. Rifkin called Williams-Sonoma's 6 percent dividend boost "a modest positive" and cut his 2015 profit forecast to $3.60 a share, 6 percent above the mid-point of the company's latest guidance.

Rifkin maintained a Neutral rating and $85 target on Williams-Sonoma.