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Was Goldman Right to Upgrade Ethan Allen?

Cramer thinks 2012 could bring with it a US housing shortage, as the number of household formations is vastly outpacing the number of actual homes in this country. He’s not recommending homebuilders just yet, though, but rather retailers who make their money selling to homeowners. He thinks that’s the best way to play the sector as it finally makes its turn.

One company in particular that Cramer has endorsed is Ethan Allen, citing ETH’s own turn as the reason. And apparently Goldman Sachs agrees because on Tuesday it upgraded the stock to “neutral” from “sell” and raised its earnings forecast. ETH has jumped 10% since.

But Cramer doubts the move is over. Not with only two analysts rating the stock a “buy” versus four “holds” and one “sell.” That leaves too much room for further upgrades, and as we saw this week, Cramer said, “upgrades and number bumps equal a higher share price.”

Is Cramer right? Or do the bearish Wall Street professionals have the better take on Ethan Allen? Maybe this interview with CEO Farooq Kathwari clear things up.

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