NEW YORK (TheStreet) -- Shares of Restoration Hardware Holdings (RH) - Get Report are rising by 5.25% to $41.07 on heavy trading volume Wednesday afternoon, even though the holding company reported weak 2015 fourth quarter results.
After yesterday's closing bell, the Corte Madera, CA-based luxury home furnishings retailer posted adjusted earnings of 98 cents per share, lower than analysts' projections of $1.39 per share.
Revenue was $647.2 million, which fell short of Wall Street's estimates of $710.9 million.
For the 2016 first quarter, the company expects earnings per share between 4 cents and 6 cents, while analysts are looking for earnings of 17 cents per share. Revenue for the quarter is expected to be between $452 million to $456 million, below analysts' forecasts of $459.52 million.
Restoration Hardware's first quarter results will be negatively affected by higher investments to improve customers' experience, the company said in a statement. Additionally, the company's RH Modern brand has been impacted by shipping and production delays.
Deutsche Bank cut its price target on the stock to $50 from $60 following the results, but maintained its "buy" rating on valuation.
"We had believed that RH was in a goldilocks scenario, where on the one hand if guidance was too aggressive this would be met with skepticism, allowing bears to press on the assumption that RH could miss, while guidance that was deemed too weak would have further fueled the fire that problems persist," the firm wrote in an analyst note.
"Instead, we believe RH delicately balanced the line between sales and EPS guidance, providing a plausibly low bar while at the same time allaying concerns that RH is and would comp negative," Deutsche Bank added.
About 8.95 million of the company's shares were traded by this afternoon compared to its average volume of 2.91 million shares per day.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C on the stock.
The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and reasonable valuation levels.
As a counter to these strengths, the team also finds weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: RH