Zinger Key Points
- RH missed expectations and did not provide much clarity around its near-term trajectory, one analyst said.
- While there is limited visibility into sales drivers, the company lowered its full-year EBIT margin guidance, another analyst added.
- Get New Picks of the Market's Top Stocks
Shares of RH RH tanked in early trading on Friday, after the company reported disappointing third-quarter results.
The results came amid an exciting earnings season.
Here are some key analyst takeaways from the earnings release.
Telsey Advisory Group On RH
Analyst Cristina Fernández maintained a "Market Perform" rating, while reducing the price target from $325 to $285.
RH reported downbeat third-quarter results and “did not provide a lot of clarity around the company's near-term trajectory,” Fernández said in a note.
“Near-term, RH is being impacted by the difficult housing market and the lagging effect of not having a lot of new products in recent years nor investing in marketing, and prices that got too high,” the analyst stated. Although RH has implemented measures to improve its performance and regain market share, the benefit of these initiatives “is likely to take a few quarters to materialize,” she added.
Morgan Stanley On RH
Analyst Simeon Gutman reiterated an "Equal Weight" rating, while slashing the price target from $340 to $290.
RH reduced its 2023 EBIT margin guidance and a revenue inflection at the company has likely been pushed to mid-2024, Gutman said. “Visibility is limited into how new revenue drivers (international expansion, RH Contemporary) are performing,” he stated.
“Given a prolonged top-line recovery, lowered price points across product lines, and continued investments in international expansion, profitability may remain pressured near-term and achieving a sustainable low 20% EBIT margin may be pushed out — which we believe is a key tenet of the bull case,” he added.
KeyBanc Capital Markets On RH
Analyst Bradley Thomas reaffirmed a "Sector Weight" rating on the stock.
“RH results continue to be pressured by a softer demand environment, elevated promotional activity, and growth investments,’ Thomas wrote in a note.
“Encouragingly, the Company expects demand trends to accelerate through 1H24, benefiting from product and gallery transformations,” he added.
RH Price Action: Shares of RH had tumbled 14.00% to $242.01 at the time of publication on Friday.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
