Goldman Sachs upgrades RH on improved execution, demand trends

Investing.com -- Goldman Sachs upgraded RH (NYSE: RH) to "Neutral" from "Sell" given improving demand trends, strategic supply chain shifts, and the company's expectation of turning free cash flow positive next year. The brokerage set a price target of $374.

Despite a weak housing market, RH has benefited from new product offerings and increased marketing efforts, including expanded advertising and sourcebooks. Goldman also noted RH’s reduced reliance on China and Mexico in its supply chain and the completion of major investment cycles, such as its European expansion and product transformation.

Since being placed on Goldman’s Americas Sell List in December 2022, RH shares have climbed 67%, outperforming the S&P 500’s 52% gain. While the firm sees ongoing risks—including a sluggish housing market, tough year-over-year comparisons, and high leverage—RH’s strong execution in merchandising and pricing has more than offset macroeconomic challenges.

Goldman also raised its price target for Neutral-rated Williams-Sonoma (NYSE: WSM) to $224 while cutting to a "Sell" rating on Floor&Decor with a $79 price target.

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