The headline of the Janney Capital report on Williams-Sonoma’s stock says it all: "Downgrading to Sell—Great Companies Are Not Always Great Stocks."
I've often said that all too often investors confuse the two: the stock and the company.
But analyst David Strasser obviously doesn't, and his attempt to pay homage to the company while being realistic about the stock’s potential shows in his report.
"This is a very good company," he writes, "but we believe Q4 estimates and 2012 guidance are both at risk. Margins at the Williams-Sonoma brand in particular are inflated, and yet sentiment remains very bullish around the stock, with nominal short interest (3.5 percent of float). Management has done a great job during the recovery but we fear they don’t have levers to pull to drive earnings when sales moderate."
Not surprisingly, from the looks of William-Sonoma's stock Tuesday (it barely budged) few are taking Strasser seriously. Too bad.
Questions? Comments? Write to HerbOnTheStreet@cnbc.com