RH's Robust Share Buybacks Surpass Expectations, Analyst Raises 2023 EPS Estimate

Telsey Advisory Group analyst Joseph Feldman reiterated a Market Perform rating on the shares of RH RH and raised the price target from $225 to $365.

The analyst has revised EPS estimates and 12-month price target to reflect RH's share repurchases since its 1Q23 report on May 25.

The analyst’s 2023 EPS estimate changed to $10.82 from $9.90 (FS at $10.46) to reflect the buybacks, partially offset by greater dilution from stock options given the share price appreciation.

While the analyst is not surprised to see RH repurchase shares, the magnitude was bigger than expected.

The analyst sees RH opening its first international store in England in June and its plans to accelerate new product introductions in 2H23 as positive developments.

However, the analyst said the housing market remains challenged and consumers continue to gravitate to spending on services and travel.

The latest update from the U.S. Census Bureau showed sales at furniture and home furnishing stores declined 7% in the three months ended June, specified the analyst.

RH’s stock has vastly outperformed the S&P 500 in the last 90 days (up 52% vs. the S&P 500 up 10%), which the analyst believes reflects the buybacks and the potential upside from international expansion.

Price Action: RH shares are trading lower by 0.24% at $389.11 on the last check Tuesday.