RH (RH) stock is one of the biggest gainers on Wall Street Friday after the home furnishings retailer reported mixed results for its fiscal third quarter and raised its fourth-quarter and full-year outlook.
In the three months ending November 2, RH's revenue increased 8.1% year over year to $811.7 million. It also swung to a profit of $2.48 per share from a loss of 42 cents in the year-ago period.
"The positive inflection of our business continued to gain momentum with third-quarter demand increasing 13% despite operating in the worst housing market in 30 years," wrote RH CEO Gary Friedman in the company's shareholder letter. "Our vector is increasing in both magnitude and direction with November demand up 18%, as the most prolific product transformation and platform expansion in the history of our industry continues to unfold."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results came up short of analysts' expectations. Wall Street was anticipating revenue of $812.2 million and earnings of $2.65 per share, according to MarketWatch.
As a result of "current trends," RH raised its fourth-quarter and full-year guidance. The company now anticipates fourth-quarter revenue growth in the range of 18% to 20% and full-year revenue growth between 6.8% to 7.2%. It had previously forecast revenue growth of 5% to 7% in fiscal 2024.
"We have worked hard to destroy the former version of ourselves and are in the process of unleashing what we believe is an exponentially more inspiring and disruptive RH brand, inclusive of the most prolific product transformation and platform expansion in the history of our industry," Friedman said.
Is RH stock a buy, sell or hold?
RH shares had a slow start to 2024 but started picking up steam mid-summer. The retail stock is now up more than 49% for the year to date. And Wall Street is bullish on the former member of the Berkshire Hathaway equity portfolio.
According to S&P Global Market Intelligence, the consensus recommendation among analysts it tracks is a Buy.
However, analysts' price targets have failed to keep up with the recent surge in RH's share price. Indeed, analysts' average price target of $400.64 represents a notable discount to current trading levels. This could prompt price-target hikes following the consumer discretionary stock's post-earnings pop.
Financial services firm Wedbush is one of those that raised its target price on RH after earnings, to $500 from $430, while also maintaining its Outperform rating (equivalent to a Buy).
Wedbush analyst Seth Basham believes the upwardly revised price target, which is based on his expectation that RH should trade at 25 times Jefferies' fiscal 2026 earnings-per-share estimate of $20.04, is appropriate "given the sharply accelerating growth trends, the visible medium-term growth drivers, and the long-term potential."
Related Content
-
2026 Disney Dining Plan Returns: Free Dining for Kids & Resort BenefitsPlan your 2026 Walt Disney World vacation now. Learn about the returning Disney Dining Plan, how kids aged three to nine eat free, and the exclusive benefits of staying at a Disney Resort hotel.
-
How Can Investors Profit From AI's Energy Use?Global energy demand is expected to grow by leaps and bounds over the next several years as AI usage accelerates. Here's how to get a piece of the pie.
-
How Can Investors Profit From AI's Energy Use?
Global energy demand is expected to grow by leaps and bounds over the next several years as AI usage accelerates. Here's how to get a piece of the pie.
-
Can Trump Fire Powell? A Supreme Court Case Could DecidePresidential posts threaten to overwhelm decades of precedent and tradition, whatever the nine justices decide.
-
What Are AI Agents and What Can They Do for You?AI agents promise to be the next big thing in artificial intelligence, but what exactly do they do?
-
Should You Buy an iPhone Now Before Tariffs Hit?Looming tariffs can make an iPhone purchase seem urgent. Here's what to do if you need another phone but want to save money.
-
SRI Redefined: Going Beyond Socially Responsible InvestingNow that climate change has progressed to a changed climate, sustainable investing needs to evolve to address new demands of resilience and innovation.
-
Here's When a Lack of Credit Card Debt Can Cause You ProblemsUsually, getting a new credit card can be difficult if you have too much card debt, but this bank customer ran into an issue because he had no debt at all.
-
33 Stocks That Could Rally 50% or More This YearAnalysts say these S&P 500 stocks have at least 50% price upside over the next year or so.
-
Stock Market Today: Dow Drops 971 Points as Powell Pressure Ramps UpPresident Trump is increasing his attacks against Jerome Powell, insisting the Fed chair cut interest rates.
