RH (NYSE:RH) Shares Up 5.6% - What's Next?

Key Points

• RH shares rose 5.6% to about $126.39, although trading volume was 84% below the average. The stock remains below its 50-day and 200-day moving averages, indicating continued technical weakness.
• RH reported adjusted earnings of $2.70 per share, well above the $0.38 consensus estimate, while revenue of $922.2 million modestly exceeded forecasts. However, revenue grew just 2.6% year over year and earnings declined from $2.93 in the prior-year quarter.
• Analyst sentiment remains mixed: Goldman Sachs cut its price target to $140 while maintaining a neutral rating, and the broader consensus is “Hold” with an average target of $163.79. Institutional investors own about 90% of the stock, while an RH director recently sold 1,000 shares.

RH (NYSE:RH - Get Free Report) traded up 5.6% on Wednesday. The company traded as high as $126.99 and last traded at $126.39. 162,779 shares were traded during trading, a decline of 84% from the average daily volume of 1,002,044 shares. The stock had previously closed at $119.74.

Key Stories Impacting RH

Here are the key news stories impacting RH this week:

• Positive Sentiment: Goldman Sachs’ revised $140 target still implies approximately 10.9% upside from the referenced share price of $126.19, suggesting the analyst sees potential for recovery even after reducing expectations.
• Neutral Sentiment: RH recently reported quarterly earnings of $2.70 per share, significantly above the $0.38 consensus estimate, while revenue of $922.2 million also exceeded expectations. However, revenue growth was modest at 2.6% year over year, and earnings declined from $2.93 per share in the comparable period.
• Negative Sentiment: Goldman Sachs cut its RH price target from $164 to $140 and retained a “neutral” rating, signaling reduced confidence in the company’s near-term growth or valuation outlook.
• Negative Sentiment: The stock remains below its 50-day and 200-day moving averages, reflecting ongoing technical weakness. RH also has a relatively high beta, indicating that investor sentiment may produce sizable price swings.

Analysts Set New Price Targets

A number of analysts have issued reports on the company. Wall Street Zen raised RH from a "sell" rating to a "hold" rating in a research note on Saturday, September 12th. UBS Group set a $190.00 price target on shares of RH in a research report on Friday, September 11th. Weiss Ratings raised shares of RH from a "sell (d)" rating to a "sell (d+)" rating in a research report on Friday, September 11th. BNP Paribas Exane reissued an "underperform" rating and issued a $81.00 price objective (down from $90.00) on shares of RH in a report on Friday, September 11th. Finally, Stifel Nicolaus cut their price objective on shares of RH from $130.00 to $120.00 and set a "hold" rating for the company in a research report on Monday, September 28th. Seven research analysts have rated the stock with a Buy rating, nine have assigned a Hold rating and three have given a Sell rating to the company's stock. Based on data from MarketBeat, the company currently has a consensus rating of "Hold" and an average target price of $163.79.

RH Stock Performance

The firm has a 50 day simple moving average of $135.85 and a 200-day simple moving average of $145.50. The company has a debt-to-equity ratio of 26.57, a current ratio of 1.12 and a quick ratio of 0.37. The company has a market cap of $2.41 billion, a price-to-earnings ratio of 22.54, a PEG ratio of 2.18 and a beta of 1.91.

RH (NYSE:RH - Get Free Report) last posted its earnings results on Thursday, September 10th. The company reported $2.70 EPS for the quarter, beating analysts' consensus estimates of $0.38 by $2.32. The company had revenue of $922.15 million for the quarter, compared to the consensus estimate of $915.09 million. RH had a return on equity of 132.79% and a net margin of 3.23%. The company's revenue for the quarter was up 2.6% on a year-over-year basis. During the same quarter in the previous year, the business earned $2.93 earnings per share. As a group, analysts predict that RH will post 5.23 EPS for the current fiscal year.

Insider Buying and Selling at RH

In other news, Director Mark Demilio sold 1,000 shares of the business's stock in a transaction that occurred on Tuesday, September 22nd. The shares were sold at an average price of $132.00, for a total value of $132,000.00. Following the sale, the director directly owned 25,680 shares of the company's stock, valued at approximately $3,389,760. The trade was a 3.75% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. 26.90% of the stock is currently owned by corporate insiders.

Hedge Funds Weigh In On RH

Hedge funds have recently made changes to their positions in the stock. BlackRock Inc. increased its holdings in RH by 41.7% during the 2nd quarter. BlackRock Inc. now owns 1,978,271 shares of the company's stock worth $325,881,000 after purchasing an additional 581,710 shares during the period. Alyeska Investment Group L.P. boosted its stake in shares of RH by 4.4% in the 2nd quarter. Alyeska Investment Group L.P. now owns 1,708,997 shares of the company's stock valued at $281,523,000 after buying an additional 72,674 shares during the period. Dimensional Fund Advisors LP grew its position in shares of RH by 33.2% during the first quarter. Dimensional Fund Advisors LP now owns 316,111 shares of the company's stock worth $44,193,000 after buying an additional 78,782 shares in the last quarter. Bank of New York Mellon Corp grew its position in shares of RH by 23.5% during the first quarter. Bank of New York Mellon Corp now owns 259,969 shares of the company's stock worth $36,349,000 after buying an additional 49,384 shares in the last quarter. Finally, Bank of America Corp DE grew its position in shares of RH by 166.5% during the first quarter. Bank of America Corp DE now owns 238,681 shares of the company's stock worth $33,372,000 after buying an additional 149,127 shares in the last quarter. Hedge funds and other institutional investors own 90.17% of the company's stock.

About RH

RH, formerly known as Restoration Hardware, is a luxury home-furnishings company that curates and sells products for residential and hospitality interiors. Its offerings include furniture, lighting, textiles, rugs, bath and plumbing fixtures, outdoor furnishings, décor, and related design products.

The company markets its products through a multichannel platform that includes RH Galleries, smaller design galleries, outlet locations, catalogs, and its digital channels. RH also operates businesses such as Waterworks, which specializes in luxury kitchen and bath products, and provides interior-design services through its design professionals.

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