Kohl’s price target was raised to $42 from $15. Ralph Lauren’s price target was raised to $144 from $77.
“We think stocks with these three criteria will shine this year: 1) will benefit from transformational changes which have been overlooked by the market due to its focus on the pandemic; 2) sell-side consensus 2021/2022 estimates are too low; and 3) underperformed in 2020,” analysts led by Jay Sole said.
In addition to these factors, UBS expects Kohl’s partnership with Sephora to be “transformative.”
“We have a generally positive 2021 outlook on the group as a whole. We forecast 5% price target upside for the average stock in our coverage universe,” analysts said.
However, there are some coronavirus-related trends that will persist.
“E-commerce disruption was a major theme before the pandemic began and we think disruption continues after the pandemic ends. Plus, we also believe dominant pre-COVID-19 trends such health & wellness and casualization stay highly relevant post-COVID. This will limit the rebound in weaker channels, such as department stores, and weaker categories.”
On the home front, Wells Fargo analysts say retailers like Home Depot Inc.
and Tractor Supply Co.
in the home improvement space will continue to thrive while those like Best Buy Inc.
Bed Bath & Beyond Inc.
and At Home Inc.
which were more focused on work-from-home and at-home schooling, will find that their 2020 gains were more “transitory.”
“Despite well documented tailwinds from de-urbanization, nesting and wallet share shift, we believe FY20’s exceptionally strong home furnishings performance is less likely to repeat in 2021,” analysts led by Zachary Fadem said.
“While 1H likely sees continued benefits from the lapping of early 2020 store closures, catch up of supply chain/inventory constraints and lingering benefits from government stimulus and seasonal items, we expect 2H to face the considerable challenges of tough compares and likely return of category promotions.”
which has seen its stock rally 173.5% over the past year, has benefitted from a number of trends, including the shift to online. But Wells Fargo says the stock is “entering a digestion/transition period” as it faces tough comparisons and low visibility on sales and margins in 2021.
Wells Fargo rates Wayfair stock equal weight with a price target of $285.
One home furnishings retailer that Wedbush is upbeat about is Williams-Sonoma Inc.
analysts have added to their “Best Ideas” list.
“Looking forward to 2021, we forecast mid-high single-digit comp growth driven by easy comparisons in the first half, fulfillment of back orders and continued strong demand at least through 3Q21,” analysts said.
Strength in the housing industry is also a plus. Wedbush rates Williams-Sonoma stock outperform with a $132 price target.
And outside of the analyst world, home furnishings continues to get a boost. Last week, Resident, a digital platform for mattresses and online home furnishing brands, received a $130 million investment, which the company plans to use to build out brick-and-mortar stores and strengthen its supply chain.
“COVID has generated tremendous momentum for e-commerce companies worldwide and our focus on data-driven performance marketing allowed us to react to market trends faster than others,” said Eric Hutchinson, Resident’s co-founder, in a statement.
“The increased demand also forced us to drive efficiencies across every area of the business, which will create benefits for years to come.”