Why This Williams-Sonoma Analyst Has Turned Bearish On The Stock For 2023

Over the past three months, analysts have reduced their price targets for Williams-Sonoma, Inc. (NYSE: WSM) by around 30%.

Earnings revisions for the company could turn “sharply negative” in 2023, according to Morgan Stanley.

The Williams-Sonoma Analyst: Simeon Gutman downgraded the rating for Williams-Sonoma from Equal-Weight to Underweight, while reducing the price target from $150 to $100.

The Williams-Sonoma Thesis: The stock’s current valuation already reflects market expectations of negative earnings revisions, Gutman said in the downgrade note.

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The analyst added, however, that the extent of earnings revisions “may be greater than the market expects” and their timing “could accelerate in the next 1-2 quarters.” This “should keep valuation pressured until there is more clarity on the earnings/margin trough,” he further wrote.

“Significant downside to estimates alongside only modest anticipated multiple expansion over the next 12 months drives our bearish view on the stock,” Gutman stated.

WSM Price Action: Shares of Williams-Sonoma had declined by 3.61% to $118.00 in premarket trading on Monday.

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Photo: Courtesy of Clotee Pridgen Allochuku on flickr.