Market Overview

Restoration Hardware Benefitting From 2 Inventory Initiatives

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RH (NYSE: RH), formerly known as Restoration Hardware, was upgraded from Hold to Buy by Deutsche Bank after conducting a series of recent store channel checks.

“We are increasingly convinced that the threat of demand pull forward from well-above expected outlet sales is potentially overstated. We remain above consensus on comps and total sales for FY17-FY19,” said Deutsche Bank analyst Adam Sindler.

Deutsche Bank is increasing its buyback assumption for the second quarter, up to $200 million from its previous $90 million buyback estimate.

Sindler believes RH is benefitting from two inventory initiatives simultaneously: consolidating its direct to consumer network and improving supply chain efficiency.

This includes moving “first quality” inventory that is marketed via email or on the company’s website through core stores, and moving “second quality” inventory through outlets and warehouses.

The firm believes through its channel checks that sales from outlets will not meaningfully impact purchases from the company’s core customers.

Deustche Bank also raised its price target on RH to $66, up from $45.

Shares of RH were up nearly 5 percent on Friday.

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Latest Ratings for RH

DateFirmActionFromTo
Aug 2019UpgradesUnderperformBuy
Jul 2019MaintainsNeutral
Jul 2019MaintainsBuy

View More Analyst Ratings for RH
View the Latest Analyst Ratings

Posted-In: Adam Sindler Deutsche Bank Restoration Hardware rhAnalyst Color Analyst Ratings Trading Ideas

 

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