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The Ratings Game: RH core sales aren’t improving, according to rare bearish note from Bank of America

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While many analysts are upbeat about RH’s growth, Bank of America rates the stock underperform.

RH’s sales in its core home-furnishings gallery aren’t improving, according to Bank of America Merrill Lynch, which maintained its underperform stock rating in a Monday note.

The bearish note is a rare one, with other research analysts putting out upbeat notes following RH’s RH, +3.00% fiscal first-quarter earnings report just weeks ago. However, Bank of America says core revenue growth at RH, formerly known Restoration Hardware, has slowed over the last year.

“One of the key arguments for our underperform rating on RH is that sales growth from RH’s gallery conversion strategy is not materially improving and [Wall Street] continues to overestimate RH’s long-term growth potential,” analysts wrote.

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