What Happened?
Shares of luxury furniture retailer RH (NYSE: RH) fell 4.2% in the morning session after a mixed analyst report from Wells Fargo had investors focusing on lowered earnings estimates due to tariff impacts.
While Wells Fargo actually raised its price target on the luxury furniture retailer to $295 from $275 and maintained an 'Overweight' rating, it also cut its earnings per share forecasts for fiscal 2025 and 2026. The firm cited tariff impacts for the reduced earnings outlook. The market's negative reaction suggests that concerns over the near-term pressure on profitability from tariffs are currently outweighing the analyst's more optimistic long-term valuation, which was justified by easing interest rates.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy RH? Access our full analysis report here, it’s free.
What Is The Market Telling Us
RH’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 5.3% on the news that the stock extended its positive momentum as analysts at Citigroup raised their price target on the stock. Citigroup boosted its price target on the luxury home furnishings company to $233.00 from $200.00, while maintaining a neutral rating on the shares. The positive sentiment also comes as the company makes a significant move in its European expansion strategy with the opening of a major flagship store, or gallery, in Paris. This new location is a key component of RH's plan to grow its presence on the continent, as it approaches market saturation in the U.S. The company has also indicated that additional galleries are scheduled to open in London and Milan within the next year.
RH is down 41.3% since the beginning of the year, and at $231.84 per share, it is trading 49% below its 52-week high of $454.52 from January 2025. Investors who bought $1,000 worth of RH’s shares 5 years ago would now be looking at an investment worth $722.06.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
