Arhaus Buy Rating Maintained Amid Strong Demand and Strategic Sourcing, Despite Margin Risks

Analyst Max Rakhlenko from TD Cowen maintained a Buy rating on Arhaus (ARHS – Research Report) and decreased the price target to $11.00 from $13.00.

Max Rakhlenko has given his Buy rating due to a combination of factors including strong demand comparisons in the first quarter, which are seen as a positive indicator for Arhaus. Despite a soft start in April, there is optimism that the company can achieve a better exit rate. Additionally, the company’s sourcing strategy is a strength, with a significant portion of its mix coming from the U.S., and a planned reduction in reliance on China by the end of the fiscal year.
However, Rakhlenko notes that there is limited visibility into future trends, and there are potential risks to margins, particularly concerning gross margin and selling, general, and administrative expenses. While these risks are acknowledged, the Buy rating is maintained, although the price target has been adjusted to $11, reflecting a valuation based on projected earnings per share for the fiscal year 2026.

In another report released on May 12, Stifel Nicolaus also maintained a Buy rating on the stock with a $10.00 price target.