Restoration Hardware a Top Gainer After Report Beats Estimates

RH shares are higher after the hardware chain beat second-quarter earnings estimates.
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RH  (RH) - Get Report shares on Thursday jumped, making it one of the market's biggest gainers, following record second-quarter results from the Restoration Hardware parent as spending on home improvement has been strong during the pandemic. 

The Corte Madera, Calif., retailer reported adjusted earnings of $4.90 a share on revenue of $709.7 million. Analysts were expecting $3.41 a share on revenue of $704.1 million. 

RH said that revenue growth lagged demand by about 16 points due to coronavirus-prompted disruptions across its global supply chain. 

Analysts at Telsey on Thursday upgraded the stock to outperform from market perform while raising the price target to $450 from $345, Barron's reported.

Analyst Cristina Fernandez said "the high-income consumer is healthy and is investing in their homes. RH has elevated its product offering and pricing."

RH shares at last check were up 23% to $393.49. 

While the company did not provide guidance for the rest of the year, RH did say that it is "safe to assume" that the elevated level of spending on home improvement will remain high through 2021, and possibly beyond. 

Free cash flow for the quarter doubled from a year earlier to $218 million. During the quarter RH also repaid the balance of its $300 million convertible notes that were due July 15 in cash. 

Home-goods retailer Williams-Sonoma  (WSM) - Get Report rose in tandem with RH, climbing 3.5% to $93. Last month it reported strong quarterly results

Big-box home-improvement retailers Home Depot  (HD) - Get Report and Lowe's  (LOW) - Get Report also recently reported stronger-than-expected quarters. Home Depot was up 0.5% at $278.45 while Lowe's shares were 1.5% higher at $161.97.