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On Thursday, Stifel analysts upheld their Buy rating and $450.00 price target on Restoration Hardware (NYSE: RH (NYSE:RH)), despite acknowledging mixed fourth-quarter results and revenue guidance that fell short of expectations. According to InvestingPro data, RH’s stock has declined 36.65% year-to-date, with current trading at a notably high P/E ratio of 71x. The firm’s analysts pointed out that while the results did not justify the stock’s 45% drop since its late January peak, the FY25 profitability guidance exceeded expectations. This guidance includes continuous international investments and gallery expansion, supporting a margin inflection previously outlined and resulting in FY25 EBITDA guidance that surrounds the consensus of $459.47M.
Restoration Hardware’s fourth-quarter performance and forward-looking statements were carefully weighed by Stifel analysts, considering both the underwhelming aspects and the stronger-than-anticipated profitability outlook for FY25. InvestingPro analysis indicates the company’s overall Financial Health Score is currently WEAK, with particularly concerning metrics in growth and cash flow. The guidance confirmed the anticipated margin turnaround, which the company had hinted at in the previous quarter, with EBITDA projections now encompassing the general market consensus.
However, the sentiment around Restoration Hardware has been affected by reciprocal tariffs, which present an additional risk factor for the company’s fundamentals. Despite this, the analysts noted that Restoration Hardware’s surplus inventory provides some short-term maneuverability. They argued that if tariffs persist, the negative market reaction after hours suggests that Restoration Hardware is completely exposed to these new challenges. Conversely, Stifel’s analysts believe that the company is well-positioned to benefit disproportionately due to its premium focus, scale, and robust supply chain if tariffs remain.
The analysts concluded that while they will reassess their target price, their positive stance on Restoration Hardware remains unchanged. They emphasized that their EBITDA estimates are likely to stay intact despite the current market uncertainties. Restoration Hardware has been navigating through a challenging trade environment, but Stifel’s analysis indicates confidence in the company’s ability to manage these hurdles while maintaining its growth trajectory.
In other recent news, Restoration Hardware has reported its fourth-quarter 2024 earnings, which fell short of analyst expectations. The company’s earnings per share (EPS) came in at $1.58, missing the projected $1.89, while revenue was $812.4 million, below the forecasted $828.24 million. This earnings miss was followed by a significant stock decline in after-hours trading. Meanwhile, Guggenheim analysts have maintained a Buy rating on Restoration Hardware but lowered the price target from $500 to $300 due to concerns over reciprocal tariffs impacting future sales and margins.
Citi analysts have downgraded the stock from Buy to Neutral, citing external challenges such as tariffs and reduced consumer spending, and lowered the price target from $437 to $200. KeyBanc Capital Markets has kept a Sector Weight rating, noting that the company’s recent results did not meet expectations and highlighting the impact of macroeconomic conditions and tariffs. Telsey Advisory Group, however, has raised the price target to $280 from $240, maintaining an Outperform rating, reflecting confidence in the company’s long-term performance despite short-term challenges. These recent developments underscore the complex environment Restoration Hardware is navigating, with tariffs and economic uncertainties posing significant challenges.
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