Goldman Sachs Adds Restoration Hardware (RH) to Conviction Buy List; Analyst Sees 33% Upside
- Techs buoy S&P, Nasdaq; Goldman pushes Dow to record high
- Buy Any Seasonal Market Weakness Ahead of Year End Rally - Oppenheimer (SPY)
- Oil hits 16-month high in buying rush after OPEC agreement
- Consolidated Communications (CNSL) to Acquire FairPoint Communications (FRP) in $1.5B Deal
- Berkshire Hathaway (BRK-A) Book Value Could Be Boosted by $29B from Trump Tax Plan - Analyst
Get the Pulse of the Market with StreetInsider.com's Pulse Picks. Get your Free Trial here.
(Updated - August 19, 2016 8:16 AM EDT)
Goldman Sachs upgraded Restoration Hardware (NYSE: RH) from Neutral to Conviction Buy with a price target of $40, implying upside of 33%. Analyst Matthew J. Fassler pointed out a combination of low expectations and potential catalysts. He also sees long-term brand potential.
"RH is in the unique position of operating a potent franchise with low current expectations, idiosyncratic business drivers, and, we believe, two ways to create value: (1) by achieving current expectations, and reverting to growth in 2017, and (2) by engaging in a 'trading sales for profits' strategy, pulling back on some of its more ambitious capital spending plans and conserving cash," said Fassler." Our enthusiasm is driven in part by CEO Gary Friedman’s strong track record as a merchant, with the potential to extend the core brand, and by the firm’s strong positioning for ecommerce, selling only its own brand, with 43% of its business from Direct."
Discussing catalysts, the analyst said, "We expect the business to begin to recover in the 4Q, driven by the mailing of new books (the first time since spring 2015); the implementation of member pricing in these books so advertised prices mirror actual pricing; better in-stock for Modern – slated to approach 90%; and, the inclusion of Modern product in all retail stores by holiday. In a sense, we expect RH to deliver the refresh to its vitality that the market originally expected a year ago, but which was derailed by its own struggles and macro headwinds."
Shares of Restoration Hardware closed at $30.11 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPDATE: Goldman Sachs Downgrades Marvell (MRVL) to Sell
- Jefferies Raises Price Target on Parker-Hannifin (PH) Ahead of Acquisition Close
- KLR Group Raises Price Target on PDC Energy (PDCE) to $90
Create E-mail Alert Related CategoriesAnalyst Comments, Hot Comments, Hot Upgrades, Upgrades
Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!