UBS cuts Restoration Hardware price target to $235, maintains neutral

On Thursday, UBS analyst Michael Lasser adjusted the price target for Restoration Hardware (NYSE:RH) stock to $235 from the previous $250, while sustaining a Neutral rating on the company’s shares. Currently trading at $140.75, RH has seen its stock decline over 36% year-to-date. Lasser’s analysis indicates that future financial estimates for Restoration Hardware might trend downwards, influenced by the company’s guidance, which fell short of market expectations, and the anticipated impact of tariffs on the business and overall industry demand. According to InvestingPro, RH currently trades above its Fair Value, with analysts’ targets ranging from $165 to $530.

Restoration Hardware concluded the quarter with approximately $30 million in cash reserves. The revised outlook for the company’s operating profits and cash flows has raised concerns about its liquidity, though InvestingPro data shows a current ratio of 1.43, indicating liquid assets exceed short-term obligations. Despite these concerns, the company’s stock was trading at less than 16 times Lasser’s revised earnings per share (EPS) estimate for 2025 in the aftermarket, marking a significant drop from the roughly 30 times it was trading at just a few months prior. For deeper insights into RH’s financial health and valuation metrics, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Lasser noted that the company had proactively increased its inventory in anticipation of additional tariffs, which contributed to the lower cash balance but is expected to prevent the need for costly merchandise purchases shortly. Restoration Hardware’s inventory is currently estimated to be about 29% of the revised 2025 revenue estimate, which is higher than its peers.

While some competitors continue to report negative trends, Restoration Hardware’s sales grew by 18% on an underlying basis in the fourth quarter, outpacing its peers. Lasser suggests that the company’s sentiment could improve rapidly if it can demonstrate stable or enhanced performance over the next few quarters. Concluding his commentary, Lasser expressed the belief that the risk-reward profile for Restoration Hardware is balanced.

In other recent news, Restoration Hardware has faced a series of analyst revisions following its recent earnings report. The company reported fourth-quarter results that fell short of expectations, leading TD Cowen to lower its price target from $510 to $220, while maintaining a Buy rating. Stifel, however, retained its Buy rating and a higher price target of $450, citing a stronger-than-expected profitability outlook for fiscal year 2025. Conversely, Citi downgraded Restoration Hardware from Buy to Neutral and slashed its price target to $200, citing concerns over tariffs and slowing consumer spending.

Guggenheim also reduced its price target to $300 from $500, maintaining a Buy rating, but highlighted the uncertainty introduced by new tariffs. KeyBanc maintained a Sector Weight rating, noting that both sales and EPS fell below consensus estimates due to decreased demand and macroeconomic challenges. Despite these varied outlooks, analysts generally agree on the risks posed by tariffs and the current economic environment. Restoration Hardware’s ability to manage these challenges while continuing its growth trajectory remains a focal point for investors.

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