Oppenheimer: Williams-Sonoma Issues 'Transitory,' One Of 'Best-Run' Chains

• Williams-Sonoma, Inc. (NYSE: WSM) is down nearly 15 percent since its August 19 peak of $89.38.
• Brian Nagel at Oppenheimer said that this pullback is due to a "subtly weaker" Q2 earning report that "unnerved already jittery investors."
• That loss is the patient investor's gain as the issues reflect "transitory issues."

Oppenheimer's Brian Nagel reiterated the firm's view that Williams-Sonoma is one of the "best-run and most optimally positioned chains" in its industry – calling the recent pullback in shares the result of "jittery investors." The company reported earnings in late August and the stock fell as it lowered its forecast. Though net income rose and beat expectations, investors have focused on the forecast, which lowered expected EPS to $0.68 to $0.73 from $0.75.

Nagel said that after "closely" reviewing recent trends, the firm concluded that the "expense and to a lesser extent sales dislocations at the chain are likely to persist." However, "they nonetheless reflect largely transitory issues."

With that, Nagel said the firm left its $90 price target unchanged from its June upgrade – suggesting that there is more than 15 percent upside from current price. The firm's initial upgrade came when the price was at $79.23, above the current price at $75.99. Year-to-date, the price has increased 0.5 percent, outperforming the S&P 500 by 7.5 percent.