Arhaus downgraded to Neutral from Overweight at Piper Sandler

Piper Sandler last night downgraded Arhaus (ARHS) to Neutral from Overweight with a price target of $12, down from $15. The firm says the company’s company’s management changes add execution risk and impacts communication with the Street. It also sees a lack of margin expansion, noting Arhaus’ EBITDA margins have declined a “remarkable” 10%, on average, in the second half over the last two years. The company’s 2025 guidance calls for no margin expansion, which may be conservative, but its path to margin recovery remains unclear, the analyst tells investors in a research note. Piper believes Arhaus’ “noisy” 2024 likely limits the stock’s multiple expansion.