RH's (RH) Q1 results are unlikely to instill confidence that an inflection in its top and bottom line is underway, as the full launch of RH Estates appears to have been pushed back and forward estimates could move lower in the near term, UBS Securities said in a Monday research report.
UBS said it expects Q1 sales to decline 3%. The firm also noted that if RH lowers its sales growth and margin outlook, fiscal 2026 earnings per share could fall into a range of roughly $3.50 to $5.10, compared with current consensus expectations of $5.25.
The company is scheduled to report Q1 results Thursday after market close.
As the company's real estate asset sales are expected to generate a major portion of its free cash flow guidance this year, it remains unclear when and if the company will monetize part of its assets in the near-term, according to the note.
The company is likely to continue facing moderate tariff cost pressure on gross margins in the upcoming quarters, analysts wrote.
UBS reiterated its neutral rating on the stock and adjusted its price target to $155 per share from $160 earlier.
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