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On Thursday, Guggenheim analysts revised their outlook on Restoration Hardware (NYSE:RH) shares, reducing the price target to $300 from the previous $500, while still maintaining a Buy rating on the stock. Currently trading at $249.35, RH has seen its stock price decline 36.65% year-to-date, with analyst targets ranging from $165 to $530. The adjustment follows the announcement of reciprocal tariffs by the Trump administration, which has introduced significant uncertainty regarding future net sales and profit margins for the company.According to InvestingPro, RH currently shows several key indicators worth monitoring. Subscribers can access 10+ additional ProTips and comprehensive financial analysis through the platform’s Pro Research Report.
Restoration Hardware recently reported a robust demand in its fourth quarter, with RH Core and RH Consolidated sales up 21.0% and 17.0% respectively. The company maintains a gross profit margin of 44.2% on trailing twelve-month revenue of $3.1 billion. This growth has been attributed to the company’s significant product and real estate transformation efforts. However, the looming tariffs pose a risk of increasing product costs by 30-35%, based on the analysis of the country of origin.
The Guggenheim analyst noted that despite the strong initial guidance for 2025 presented by Restoration Hardware’s management, investors are likely to overlook this due to the current economic uncertainties. The market is now waiting for further details on how the company plans to mitigate the potential impact of the tariffs and the implications for customer demand in the face of changing prices.
The analyst’s decision to remove Restoration Hardware from Guggenheim’s "Best Idea" list underscores the potential negative effects that the new tariffs could have on the entire furniture and furnishings industry. The firm’s revised estimates and price target reflect the need for caution as the sector navigates through these new challenges.
In other recent news, Restoration Hardware (RH) reported its fourth-quarter 2024 earnings, revealing a miss in both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $1.58, falling short of the expected $1.89, while revenue came in at $812.4 million, below the forecasted $828.24 million. Despite these setbacks, RH demonstrated a strong revenue increase of 18% on a comparable 13-week basis and a 57% rise in adjusted operating income. Looking ahead, RH projects fiscal year 2025 revenue growth of 10-13% and an adjusted operating margin of 14-15%. In response to these developments, Telsey Advisory Group raised its price target for RH to $280 from $240, maintaining an Outperform rating. The company plans to expand its manufacturing in North America and open new design and concept galleries. Additionally, RH is navigating a challenging housing market and adjusting to increased tariffs, while continuing its strategic focus on international expansion.
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