The company lowered its full-year revenue forecast
Home furnishing retailer RH (NYSE:RH) announced yesterday evening that it was lowering its full-year 2022 revenue forecast, and now expects a decline between 2% and 5%. The company’s CEO noted a weakening maro-economic environment, which has weighed on demand. In response, RH is down 7.7% at $219 ahead of the open.
Following the update, analysts rushed in to slash their price targets on RH stock. No less than nine brokerages lowered their price objectives, including Tesley, which cut its price target all the way to $285 from $375. UBS also issued a deep price-target cut to $240 from $350.
The 12-month consensus price target now stands at $344.87 — a 45.3% premium to current levels. Meanwhile, 11 of the 16 in coverage still consider the stock a “strong buy,” which could leave it vulnerable for even more bear notes down the line.
Options traders have also been unusually bullish, and an unwinding here could put even more pressure on the shares. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day call/put volume ratio of 6.54 that stands higher than 100% of readings from the past year. In other words, calls are being picked up at their quickest clip in a year at the moment.
It’s been a tough year for the stock, which was already down more than 55% in 2022. The shares are looking to wrap up the second quarter with more than 30% in losses as they log their fourth-straight quarterly drop — marking RH’s longest losing streak of this kind since 2016. An even closer look shows the stock ready to open at its lowest level in over two years, while the 40-day moving average has worked to lead the stock lower for the better part of the past 12 months.