William Blair analyst Phillip Blee has reiterated their bullish stance on RH stock, giving a Buy rating today.
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Phillip Blee has given his Buy rating due to a combination of factors that highlight both challenges and opportunities for RH. Despite the company’s reduced full-year guidance, which suggests a significant margin improvement in the fourth quarter, there are concerns about the visibility of RH’s earnings model. These concerns stem from uncertainties related to price elasticity, increased tariffs, and elevated clearance levels, as well as the success of its international expansion. However, Blee is encouraged by RH’s improving free cash flow and gross margin expansion, supported by plans to reduce capital expenditures by 20% annually over the next two years, which should enhance liquidity and manage its net leverage ratio.
Furthermore, Blee believes that RH has potential avenues to bolster its liquidity, such as real estate sales or convertible debt, which could help reduce its debt leverage. Although there is some apprehension regarding the company’s earnings outlook amid an uncertain housing market, Blee finds the valuation attractive at 8.6 times the 2026 EBITDA estimate, providing sufficient flexibility to justify maintaining an Outperform rating.
In another report released today, TD Cowen also maintained a Buy rating on the stock with a $265.00 price target.