TD Cowen reiterates Buy rating on Restoration Hardware stock

Investing.com - TD Cowen has reiterated its Buy rating on Restoration Hardware (NYSE:RH) stock with a price target of $235.00, representing a potential 25% upside from the current price of $188.32. According to InvestingPro data, analyst targets for RH range from $179 to $436.

The firm highlighted the "impressive RH Montreal opening" in what it describes as a market with significant potential for the luxury home furnishings retailer.

TD Cowen’s analysis indicates that RH’s e-commerce market share appears to be growing compared to Arhaus (NASDAQ:ARHS) while remaining stable against Pottery Barn.

The firm also noted that RH’s prices on comparable items are approximately 13% lower than Arhaus, potentially giving the company a competitive advantage in the luxury home furnishings space.

Despite current weak sentiment related to guidance risks, inventory management challenges, and debt concerns - including a significant total debt of $3.9 billion - TD Cowen suggests that with expected near-term interest rate cuts, investors are looking for reasons to become more positive on the stock. InvestingPro analysis shows 12 additional key insights about RH’s financial health and growth prospects, available exclusively to subscribers.

In other recent news, Restoration Hardware reported a surprising profit for its first quarter, posting earnings of 13 cents per share, contrary to analysts’ expectations of a 9 cents per share loss. The company’s quarterly revenue was $814 million, slightly below the anticipated $818.1 million. Despite the revenue miss, the profit surprise has generated positive investor sentiment, reflecting confidence in the company’s ability to maintain profitability amid challenging conditions. Restoration Hardware maintained its full-year fiscal 2025 forecast, indicating management’s confidence in its business outlook despite economic uncertainties. UBS kept a Neutral rating on the stock, expressing concerns about the company’s elevated inventory and the potential need for pricing adjustments. KeyBanc reiterated its Sector Weight rating, noting mixed first-quarter results with revenues below expectations but earnings per share above forecasts. Stifel maintained a Buy rating and a $390 price target, highlighting a meaningful recovery in demand during the quarter. Jefferies, while raising its price target slightly to $209, retained a Hold rating, citing concerns about the luxury housing market and increased promotional activity.

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