Banc of America Boosts Williams-Sonoma to 'Buy'

Analyst Shelly Hale sees upside to the home goods retailer's earnings estimates, after a remarkably strong first quarter

Banc of America upgraded Williams-Sonoma (WSM ) to buy from market perform.

The home goods retailer raised guidance and also set a 2-for-1 stock split. Analyst Shelly Hale says Williams-Sonoma pre-announced a huge first quarter upside. She notes operating margins are expected to expand 340 basis points to 3.9%, adding that strong response to new Pottery Barn merchandise has resulted in expected comparable sales (sales at stores open for more than one year) of 5% vs. her 4% estimate.

Hale says if business remains as strong as in the first quarter, she believes there's upside to her fiscal 2003 and 2004 estimates. She raised her $1.54 fiscal 203 (Jan.) EPS estimate to $1.74. She has a $62 target.

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