Williams-Sonoma (WSM) is expected to deliver a solid fiscal Q2, supported by improving demand, market-share gains and resilient margins, UBS Securities said Monday in a report.

The key debate is whether Williams-Sonoma can sustain its recent sales momentum, protect its elevated margins, and deliver enough earnings strength to support a stock that has already moved higher, UBS said. The retailer's premium positioning, strong brand equity and disciplined full-price selling continue to resonate with its higher-income customer base, the report said.

Tariff-related costs flowing through cost of goods sold are likely to pressure merchandise margins, though the impact is expected to be milder than company guidance implies, the report said. UBS models adjusted EPS of $2.10, above consensus of $2.07, and sees room for a modest full-year guidance raise if demand and margin trends hold.

Q2 results are due Aug. 26.

UBS maintained its neutral rating on Williams-Sonoma stock and its $190 price target.

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