Dismal Forecast Hits Home Retailer Hard

RH posted disappointing third-quarter guidance

RH (NYSE:RH) is suffering a steep post-earnings slide today. Despite stronger-than-expected second-quarter results, the home retailer’s disappointing current-quarter revenue forecast resulted in no fewer than three analysts slashing their price targets, while a couple raised theirs. 

At last glance, RH was down 9.3% at $334.30, earlier as low as $328.01. The stock tumbled below recent support at its ascending 60-day moving average, though its 80-day trendline is keeping losses in check today. Familiar support at the $330 level could also provide a floor. Falling further from its Aug. 3, 52-week high of $406.38, the shares are still up roughly 25% since the start of 2023. 

UBS, Wedbush, and Citigroup all cut their price targets, while JPMorgan Securities and Jefferies raised theirs. Today’s drop has the stock dipping below its 12-month consensus price target of $349.13, which is now a slim premium to current levels. Overall, analysts are leaning bearish on RH, with 11 of the 16 in coverage carrying a “hold” or worse rating.

Short interest represents 16.2% of the stock’s available float. It would take roughly four days for shorts to cover their positions, at RH’s average pace of trading. 

As is typical after an earnings event, options traders have been quick to chime in this morning. So far, 7,658 calls and 8,929 puts have been exchanged, which is 2.7 times the average daily volume already. Expiring at today’s close, the weekly 9/8 320-strike put is the most popular, with new positions opening there. 


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