Investing.com -- Bank of America reinstated coverage of Williams-Sonoma with a Buy rating and a $250 price target in a note on Friday, describing the home goods retailer as "a rare, quality compounder in consumer discretionary" positioned to keep gaining market share.

Analyst Christopher Nardone said Williams-Sonoma sits in a favorable demographic position, with its "affordable luxury" offering targeting a core customer with roughly $150,000 in household income, which is said to be a segment showing relative resilience as luxury demand softens and lower-income consumers remain pressured.

BofA noted that the spending gap between higher- and lower-income consumers on furniture has widened by roughly 7 percentage points in the first quarter of 2026, based on the bank's aggregated credit and debit card data.

The firm highlighted Williams-Sonoma's diversified portfolio across ten banners, including Pottery Barn at 38% of total sales, West Elm at 24%, the namesake brand at 17%, and PB Kids & Teen at 15%.

BofA is "most encouraged by the momentum at West Elm," driven by category expansion, product refreshes, and successful collaborations, while also citing B2B, representing 15% of sales, as "a compelling growth vector" independent of home renovation trends.

On margins, BofA noted operating margins are up nearly 900 basis points since pre-pandemic levels, split roughly evenly between full-price selling, supply chain improvements, and e-commerce and retail optimization.

The firm expects relatively stable margins in 2026 with expansion opportunities emerging in 2027.

Importantly, BofA said it doesn't think improving housing metrics is necessary for EPS revisions to remain positive, forecasting 4-5% comparable sales growth over the next two to three years.