RH (RH) has lost nearly 40% in the past five trading sessions in the wake of President Donald Trump’s reciprocal tariffs on U.S. trading partners, particularly Vietnam, and China.
RH sources more than half of its products from those two countries, which suggests the new tariffs environment could significantly strain its profit margins and operational costs.
Still, the luxury furniture and decor company does not plan on raising prices, at least for now, its CEO Gary Friedman told investors on the earnings call this week.
Versus its year-to-date high, RH stock is down nearly 70% at the time of writing.
Is RH Stock Attractive at Current Levels?
RH shares may be attractive following the massive selloff as the company built up to $300 million worth of excess inventory ahead of the “Liberation Day”.
The strategic move wins it leverage over rivals, most of whom will have to order new furniture at a significantly higher cost.
Plus, the NYSE-listed firm is now trading at a deep discount relative to its rivals, including Williams-Sonoma (WSM). RH currently has a forward price-earnings multiple of 18.8x versus 19.4x for WSM.
RH’s Customers Are Not Price-Sensitive
Investors should also note that RH is committed to minimizing its exposure to China. In fact, it’s committed to pulling out of the largest Asian economy entirely by the end of its fiscal Q2.
Diversifying its supply chain could help RH dilute the overall impact of tariffs on its business, potentially paving the way for a swift stock price recovery.
RH stock is better positioned than rivals also because of “its scale and higher-net-worth customer base” that’s known to be significantly less price-sensitive, according to analysts at Wedbush Securities.
The firm’s “Outperform” rating on RH shares comes with a price target of $250, which indicates potential upside of nearly 80% from current levels.
How High Could RH Shares Fly in 2025?
Part of the recent weakness in RH shares may be related to its Q4 revenue that came in shy of analysts’ forecast this week. On April 2, the retailer issued disappointing guidance for the full year as well.
Still, other Wall Street firms are even more bullish on the luxury furniture company than Wedbush. The mean target on RH stock currently sits at about $410 that translates to whopping 190% upside from here.
