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Jefferies maintained its Hold rating on Restoration Hardware (NYSE:RH) while slightly raising its price target to $209.00 from $208.00, placing it within the broader analyst range of $155-$436. According to InvestingPro data, RH trades at a relatively high P/E ratio of 45.5x, with analysts expecting net income growth this year. The firm’s decision follows RH’s reiteration of its annual guidance despite ongoing challenges in the luxury housing market and cost pressures from tariffs.
RH stock jumped sharply in after-hours trading following the company’s announcement, though InvestingPro data shows the stock has struggled recently, declining over 60% in the past six months. Jefferies attributed the stock’s positive movement to the company maintaining its full-year outlook despite the difficult operating environment facing luxury retailers.
The high-end furniture retailer also revealed plans to reduce capital expenditures while simultaneously accelerating its Design Gallery openings. With a significant debt burden of $3.94 billion and a current ratio of 1.43, this capital-conscious approach appears prudent. Jefferies characterized this strategic shift as "unexpected" and "encouraging" for the company’s growth prospects. For deeper insights into RH’s financial health and growth potential, check out the comprehensive Pro Research Report available on InvestingPro.
Despite the modest price target increase, Jefferies maintained its Hold rating, citing "lack of catalysts to spur luxury housing" as a key concern. The firm also pointed to RH’s increased promotional activity, which it believes drives "sub-par results" for the company.
Jefferies further noted that RH’s international expansion efforts may face prolonged challenges, potentially creating a longer-than-anticipated drag on the company’s overall performance. These ongoing headwinds contributed to the firm’s cautious stance despite the slight price target adjustment.
In other recent news, RH reported a significant earnings surprise for its first quarter of fiscal 2025, posting earnings of $0.13 per share against an expected loss of $0.07 per share. This was a notable 285.71% upside surprise. The company’s revenue reached $814 million, which, while up 12% year-over-year, slightly missed the forecasted $818.06 million. Despite the revenue miss, RH maintained its full-year fiscal 2025 forecast, reflecting management’s confidence in its business outlook. The company plans to open 7-9 new galleries annually, expanding its international presence in cities like Paris, London, and Milan. RH also announced a delay in launching a new concept to the spring of fiscal year 2026, citing tariff uncertainty as a reason for the postponement. Analyst firms, including Guggenheim and Morgan Stanley (NYSE:MS), noted the company’s strategic investments amid a challenging housing market. These recent developments underscore RH’s efforts to navigate market volatility while continuing its global expansion.
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