Fed Governor Adriana Kugler to resign
On Monday, Stifel analysts adjusted their outlook on Arhaus Inc (NASDAQ: NASDAQ:ARHS), reducing the price target to $10 from the previous $11.50 while reaffirming a Buy rating on the company’s shares. According to InvestingPro data, analyst targets for Arhaus currently range from $8.50 to $13.00, with the stock trading at $7.96, suggesting potential upside despite recent challenges. The revision follows Arhaus’s first-quarter results for the fiscal year 2025, which revealed several challenges, including a miss on earnings, a downward revision of the full-year 2025 guidance, and product margin compression. Additionally, analysts noted a discrepancy between the demand observed from November to January and the sales figures reported for the first quarter.
Despite the setbacks reported in the first quarter, including weaker comparable sales in April, Stifel does not believe the core investment thesis for Arhaus has been altered. The company maintains a healthy gross profit margin of 45.5% and operates with moderate debt levels, as revealed by InvestingPro analysis, which rates the company’s overall financial health as "Fair." The analysts highlighted that Arhaus continued to demonstrate robust demand trends leading up to Liberation Day, surpassing its competitors, with a less significant impact from net tariffs than initially anticipated. This, according to the analysts, is a positive sign compared to their earlier, more cautious estimates.
Arhaus’s financial strength was also a point of emphasis, with the company’s net cash position of $218 million providing the ability to continue investing in growth. Stifel views Arhaus as one of the leading growth stories in the Specialty Retail sector. The company has demonstrated solid financial performance with revenue of $1.29 billion in the last twelve months, though investors should note its high beta of 2.65 indicates significant market sensitivity. For deeper insights into Arhaus’s growth potential and risk factors, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s competitive position and growth drivers. The analysts expressed confidence in the stock’s value, citing a trading multiple of 5.8 times enterprise value to estimated fiscal year 2026 EBITDA. They also noted that Arhaus’s stock price had decreased by 9.8% since Liberation Day, while the S&P 500 remained flat, potentially signaling an undervaluation.
The report concluded with a positive note on the company’s prospects despite the recent hurdles. Stifel underscored the significance of a strong April exit rate and the recent softening of tariff rhetoric, which could complement the positive data points observed. With these factors in mind, Stifel maintains its Buy rating on Arhaus, signaling continued support for the company’s stock despite the reduced price target.
In other recent news, Arhaus Inc. reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $0.0308, which fell short of the projected $0.0592. The company’s revenue for the quarter reached $311 million, slightly below the anticipated $314.83 million. Despite the earnings miss, Arhaus demonstrated a year-over-year revenue increase of 5.5%, highlighting steady demand growth. Arhaus ended the quarter with a solid financial position, holding $214 million in cash and maintaining a debt-free status. The company has also launched new product lines, including an outdoor collection and Italian upholstery, as part of its growth strategy. Looking ahead, Arhaus has provided guidance for the full year 2025, projecting net revenue between $1.29 billion and $1.38 billion and net income ranging from $48 million to $68 million. The company plans to continue its showroom expansion, with 12-15 projects slated for 2025. Additionally, Arhaus is implementing strategic investments, projected to range from $15 million to $20 million, to support its long-term growth initiatives.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.