On Thursday, Citi maintained a Neutral rating on Williams-Sonoma (NYSE:WSM), while increasing the price target from $241.00 to $292.00. The adjustment follows a detailed analysis of the company's financial prospects, including a forecast for the first quarter and the full fiscal year 2024.
Citi projects that Williams-Sonoma will report first-quarter earnings per share (EPS) of $2.58, slightly above the consensus estimate of $2.51 from other analysts. This expectation is supported by anticipated sales of $1.65 billion, compared to the market's forecast of $1.63 billion, and an operating margin of 13.7%, which is also above the Street's prediction of 13.2%.
Looking further ahead, Citi anticipates Williams-Sonoma's fiscal year 2024 EPS to reach $15.34, surpassing the Street's average estimate of $14.60. The sales projection for the year is set at $7.80 billion, marginally higher than the company's implied guidance midpoint of $7.75 billion and notably above the Street's expectation of $7.52 billion. The operating margin forecast stands at 16.8%, which is consistent with the upper end of the company's guidance range of 16.5% to 16.8% and higher than the Street's forecast of 16.3%.
The upward price target adjustment to $292 is attributed to Citi's application of a higher 17 times multiple, up from the previous 14 times. This change reflects the firm's confidence in management's ability to achieve a higher long-term operating margin target in the mid-to-high teens, as opposed to the previous target of a 15% floor.
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