Raymond James Ups Williams-Sonoma to Strong Buy

Analyst Budd Bugatch likes the retailer's consistent results and compelling stock price

Raymond James upgraded Williams-Sonoma (WSM ) to strong buy from market perform.

Analyst Budd Bugatch says strong, consistent results, continued cost controls, a slight acceleration in plans to expand emerging brands, and the increasingly compelling valuation prompted his upgrade. He notes his and the consensus estimates were 19 cents earnings per share for the second quarter; the retailer posted 23 cents earnings per share. Sales of $690 million were $11.6 million above his estimate. Bugatch says high same-store sales accounted for $9 million of sale variance, vs. his estimate. Also, a lower-than-forecast selling, general, and administrative expense accounted for the bulk of the earnings upside. He raised his 22 cents third-quarter earnings per share estimate to 23 cents, upped the $1.57 fiscal 2005 (Jan.) estimate to $1.62, and upped the $1.83 fiscal 2006 estimate to $1.86. He set a $40 12-month target.

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