The Corte Madera, CA-based company, which changed its corporate name to RH from Restoration Hardware Holdings last month, also initiated a $34 price target on shares of the high-end home furnishings retailer.
"We remain long-term believers in the RH story, supported by the transformation of its real-estate portfolio and expansion of its merchandise. We continue to believe that RH fundamentals are positioned for improvement in 2017," KeyBanc analysts wrote in a note.
Numerous transitory headwinds should subside in the quarter ahead, according to the firm. After a strong performance from 2010 to 2015, in which revenues rose double digits each year, 2016 was a difficult year, KeyBanc said.
Several issues RH cited last year should reverse in 2017. These include pressure from shipping delays of the RH Modern collection, timing of member fee recognition and SKU rationalization, the analysts said.
Additionally, results in 2016 were pressured by a reduced sense of urgency and effectiveness of promotions, delayed shipments of the company's Fall source book to the second half of the year, lack of new merchandise category launches and the exit of tabletop and gift items from stores during the holiday season, KeyBanc said.
"In 2017, earnings per share should benefit from reversal of some of these items, and we expect RH to 'block and tackle' more successfully in 2017, as well," the analysts added.