RH stock (NYSE: RH) is sharply reversing course in extended hours trading, with gains of 18.7% in the session moving the price back to $210. The luxury home furnishings retailer had previously seen it's stock come under significant pressure this year, with a decline of 55% YTD leading into the latest earnings print.
A surprise Q1 profit and affirmed FY25 outlook has caused the stock to reverse trend, dismissing questions raised about the business in the lead up to the release that had seen analysts downgrading in anticipation.
The company reported EPS of $0.40, impressively outperforming the loss of $0.20 incurred in the same period Y/Y, even if revenue came in slightly light at $813.95 million (consensus $818.24 million). RH affirmed the FY25 outlook of 10%-13% revenue growth, reflecting an EBIDTA margin of 21%. .
RH's business model centers on offering luxury home furnishings through both online channels and physical showrooms across the US, Canada, the UK, and Germany. This multi-channel approach allows the company to reach a broad customer base, but also exposes it to the challenges of managing both physical and digital operations in a competitive landscape.
Recent analyst adjustments from early this week painted a cautious picture. Telsey Advisory lowered its price target from $280 to $255, while Wells Fargo adjusted its target downward from $300 to $250. UBS also revised on 5th June, reducing RH from $235 to $215. These adjustments reflect concerns about promotional pressures within the home furnishings market and decelerating growth prospects for RH.
The average 12-month analyst price target currently sits at $254, with a wide range spanning from a high of $436 to a low of $187, highlighting the divergent opinions on the stock's future performance. The average price target continues to suggest perceived upside from current price action.
Markets clearly liked what they saw from RH both as far as earnings, and guidance, even in light of what appears to be a downwards start for indices. The SPY ETF that tracks the S&P 500 is down 1.2% through early pre-market trading. We will be watching volume as an indication as to the strength and support for the move as the regular market session opens later today.
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