Analyst Provides First Glance on RH 1Q:18 Earnings

Earnings season continues to have an impact on individual stocks, and RH (NYSE:RH) is a winner in finishing with strong advances on the day. The retail housewares store chain’s shares are shooting up 35% after beating Q1 earnings expectations and lifting 2018 guidance.

Specifically, adjusted EPS expanded significantly to $1.33, outpacing guidance for $0.95-1.05 and the Street’s $1.01 estimates. Strengthening gross margin trends largely drove upside in the quarter, despite total sales tracking toward the low end of company forecasts. In addition, RH lifted full-year EPS guidance to $6.34-6.83, up from a previous $5.45-6.20, and predicated upon accelerating gross margin gains from the company’s re-engineered operating platform.

Oppenheimer analyst Brian Nagel commented, “Shares of RH are trading meaningfully higher upon a much better than expected Q1 (Apr.) report from the chain last night. For some time, we have maintained a rather mixed view of RH. As we have indicated, while we look quite optimistically toward the underlying potential for the company’s unique omni-channel concept, we have been less than enthused by ongoing operational shortcomings at the company. The past few quarters have proven much better for RH, as, we believe, the model is starting to gain traction, and with the help of an overall more conducive spending backdrop. We continue to monitor RH closely and will be back with additional thoughts on prospects for the company and its stock.”

Meanwhile, Nagel reiterates a Market Perform rating on RH stock, without suggesting a price target.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Nagel has a yearly average return of 7.5% and a 64% success rate. Nagel is ranked #455 out of 4829 analysts.

If we turn to the Street in general, we can see that the stock also has a Hold analyst consensus rating. In the last three months, RH has received 1 buy and 4 hold ratings. These analysts have an average price target on the stock of $98.25. Given that RH is currently trading at $161.26 this suggests downside from the current share price of close to 39%.


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