Signs of an improving housing market and a more upbeat consumer prompted an analyst to upgrade home furnishing retailers Williams-Sonoma Inc., Pier 1 Imports Inc. and Ethan Allen Interiors Inc. on Monday.
"While risks to a sustained economic recovery remain, we are optimistic that we are in the early stages of a recovery that will benefit many names under our coverage," Bradley Thomas of KeyBanc Capital Markets wrote in a client note.
Thomas cited July's 7 percent increase in existing home sales compared with June and pointed out that home-related consumer spending tends to go hand-in-hand with housing data.
The analyst raised his ratings on all three retailers to "Hold" from "Underweight." He also lifted his 2009 and 2010 earnings estimates on Bed Bath & Beyond Inc.