NEW YORK (TheStreet) -- Before Thursday's market open, Restoration Hardware Holdings (RH) - Get Report stock was downgraded to "sector weight" from "overweight" at KeyBanc Capital Markets because of the company's preliminary fiscal 2015 fourth quarter financial results that were well below Wall Street consensus.
Restoration Hardware stock is plunging 21.01% to $41.01 in pre-market trading this morning.
After yesterday's market close, the Corte Madera, CA-based home furnishings company reported preliminary earnings of 99 cents per share on revenue of $647.21 million for the latest quarter.
These results fall significantly below estimates of earnings of $1.35 per share on $707.73 million in revenue because of shipping delays, unsuccessful promotions and weakness in certain markets.
"[W]e now expect 2016 to be a transition year, as RH optimizes RH Modern and Teen, delays new business launches, refines its promotional strategy, and slows its gallery transformations," KeyBanc analysts wrote in a note this morning.
Restoration Hardware will alter its promotional plan after the disappointing quarter, which will put sales at risk this year, analysts added.
Separately, Restoration Hardware has a "hold" rating and a letter grade of C at TheStreet Ratings because of the company's strengths, such as revenue growth, reasonable valuation levels and growth in earnings per share, and its weaknesses, including generally disappointing stock performance and weak operating cash flow.
You can view the full analysis from the report here: RH
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.