Restoration Hardware (RH) Decline Overdone, Says Wells Fargo
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Price: $142.16 -6.23%
Rating Summary:
9 Buy, 21 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
Rating Summary:
9 Buy, 21 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Restoration Hardware (NYSE: RH) stock declined on Thursday despite early comments from analyst Matt Nemer of Wells Fargo. Nemer defended the stock, calling the sell-off "overdone."
"Restoration Hardware has sold off sharply over the last 10 days (down 15% versus the S&P Retail Index down 2%) on concerns it will be the next retailer to preannounce lower-than-expected earnings, providing an opportunity to buy the second fastest comp growth in retail and a remarkable real estate transformation, in our view, at a discount to both earnings and square footage growth," said Nemer.
"We are taking the opportunity to slightly adjust our estimates although we believe RH offers the best risk-reward in our universe (we see an upside/downside ratio of nearly 4:1). We have not seen any change in promotional cadence in the stores or online and believe margins will see little to no pressure from that aspect. We are lowering our Q4 comp estimate to 24% from 29%, and raising our direct growth estimate to 25% from 23%, resulting in consolidated revenue growth nudging down to 23% from 24% (vs. guidance of a 23% to 26% increase which includes an extra week last year) which takes our Q4 EPS estimate from $0.85 to $0.82 (versus a guidance range of $0.82 to $0.85). Our FY2013 estimate goes to $1.71 from $1.74, our FY2014 estimate goes to $2.13 from $2.16, and our FY2015 estimate goes to $2.77 from $2.80," he added.
Wells Fargo has an Outperform rating on Restoration Hardware with a price target of $82-$85.
For an analyst ratings summary and ratings history on Restoration Hardware click here. For more ratings news on Restoration Hardware click here.
Shares of Restoration Hardware closed at $57.78 yesterday.
"Restoration Hardware has sold off sharply over the last 10 days (down 15% versus the S&P Retail Index down 2%) on concerns it will be the next retailer to preannounce lower-than-expected earnings, providing an opportunity to buy the second fastest comp growth in retail and a remarkable real estate transformation, in our view, at a discount to both earnings and square footage growth," said Nemer.
"We are taking the opportunity to slightly adjust our estimates although we believe RH offers the best risk-reward in our universe (we see an upside/downside ratio of nearly 4:1). We have not seen any change in promotional cadence in the stores or online and believe margins will see little to no pressure from that aspect. We are lowering our Q4 comp estimate to 24% from 29%, and raising our direct growth estimate to 25% from 23%, resulting in consolidated revenue growth nudging down to 23% from 24% (vs. guidance of a 23% to 26% increase which includes an extra week last year) which takes our Q4 EPS estimate from $0.85 to $0.82 (versus a guidance range of $0.82 to $0.85). Our FY2013 estimate goes to $1.71 from $1.74, our FY2014 estimate goes to $2.13 from $2.16, and our FY2015 estimate goes to $2.77 from $2.80," he added.
Wells Fargo has an Outperform rating on Restoration Hardware with a price target of $82-$85.
For an analyst ratings summary and ratings history on Restoration Hardware click here. For more ratings news on Restoration Hardware click here.
Shares of Restoration Hardware closed at $57.78 yesterday.
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