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• Wells Fargo cut its RH target to $175 from $225, pointing to Estates momentum, new gallery sales, and backlog reduction, per TheFly
• BofA cut fiscal 2026 and 2027 EPS estimates by 7% and 18%, respectively, citing housing weakness and fourth-quarter guidance risk.
• RH expects revenue growth to accelerate from 5% to 6% in Q3, and 16.1% to 21.2% in Q4 2026.

RH (RH) stock rose up to 9% in Friday's premarket following the luxury home furnishings retailer’s second-quarter (Q2) results, even as several Wall Street firms cut their price targets. The bigger debate centered on whether RH’s second-half growth setup is taking shape. 

Wells Fargo and TD Cowen pointed to Estates, new galleries, and backlog reduction as potential growth drivers, while UBS and BofA questioned whether the expected inflection will materialize, according to TheFly.

Analysts Split On RH’s Second-Half Setup

Wells Fargo cut its price target for RH Stock to $175 from $225 but maintained an Overweight rating, saying RH’s investment cycle is peaking and the second half could be its “time to shine.” 

Tariff refunds mask a tougher cost/freight backdrop, but top line matters more, and second half of the year building blocks appear in place via Estates momentum, new gallery sales and backlog reduction, the firm said, according to The Fly.

TD Cowen lowered its target to $190 from $220 and kept a Buy rating. The Fly cited the firm saying RH's fiscal 2026 through 2028 earnings-per-share (EPS) estimates changed only modestly, and it came away “optimistic” about RH Estates and London beginning in the second half.

UBS was more cautious, trimming its target to $154 from $155 and staying Neutral. It said slightly better second-quarter revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) did not provide significant evidence supporting the expected second-half inflection, according to TheFly.

According to TheFly, BofA cut its target to $114 from $156 and maintained an Underperform rating. The firm sees limited signs that housing dynamics will significantly improve in the second half as mortgage rates remain high. It flagged below-expectation third-quarter guidance, and risk to fourth-quarter guidance.

RH's Estates And Backlog Carry The Q4 Ramp

RH reported Q2 revenue of $922.2 million, up 2.6% year over year and roughly 0.6% above FiscalAI’s $916.2 million estimate. The company expects revenue growth to accelerate from 5% to 6% in the third quarter to 16.1% to 21.2% in the fourth quarter, with the Q4 ramp driven in part by an 8 percentage-point contribution from RH Estates and 6.5 points from backlog reduction.

New galleries and other initiatives are expected to add another 4 percentage points to fourth-quarter growth, while adjusted EBITDA margin is projected to improve to 19.7% to 22.9% from 12.5% to 13.5% in the third quarter.

The company also expects adjusted capital expenditures to decline to between $175 million and $200 million in 2027 from $240 million to $260 million in 2026, while gallery opening costs are projected to fall to $18 million from $48 million.

What Retail Investors Think About RH Stock?

Retail sentiment around RH stock was “extremely bullish” amid extremely high message volume.

RH Stock has fallen 30.7% so far this year, underperforming benchmark S&P 500, which has risen 10.7% during this period.

See Also: Adobe Q3 ‘Uneventful’ Even As AI ARR Tops $650M, Jefferies Says — Citi Flags Slowing Growth

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