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- RH (RH +2.8%) is higher on the day with Hedgeye adding the stock as a top long idea and calling out a path to $2000 per share.
- Analyst Brian McGough says truly transformation stories are rare in retail, but RH has proved that the large design galleries could work.
- "Now, RH is turning into the first real large scale luxury home furnishings brand. Margins are at luxury levels with the company signaling they won’t revert, and capital returns are at luxury levels. The next step will be taking this luxury brand and gallery store experience to the global consumer."
- Hedgeye sees long-term earnings power of $50 per share for RH and points to what it calls a truly massive global competitive moat with no real peers. The "bulletproof balance sheet" is also seen as a plus and expected to feature $125 per share in net cash by year five. Applying a 50X to 60X multiple to earnings suggests to McGough and team a $2000 to $2500 stock in five years.
- The Seeking Alpha Quant Rating on RH stepped up to Bullish from Neutral on October 29.
