What Happened?
Shares of luxury furniture retailer Arhaus (NASDAQ: ARHS) jumped 4.5% in the afternoon session after Morgan Stanley raised its price target on the stock.
The investment bank increased its price target to $12.00 from a previous $10.50, marking a more than 14% increase in the firm's valuation estimate. While Morgan Stanley analyst Simeon Gutman maintained an "Equal-Weight" rating on Arhaus, the higher price target reflected an updated and more positive view of the company's market performance and potential for future growth.
After the initial pop the shares cooled down to $11.03, up 3.6% from previous close.
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What Is The Market Telling Us
Arhaus’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 8.4% on the news that the company reported weak fourth-quarter 2024 results: its full-year EBITDA guidance missed significantly and its EBITDA guidance for next quarter fell short of Wall Street's estimates.
Revenue growth was flat and comparable sales declined by 6.4%, reflecting weaker consumer demand. On the other hand, Arhaus beat analysts' EBITDA expectations this quarter and its gross margin outperformed Wall Street's estimates. Overall, this was a weaker quarter.
Arhaus is down 2.9% since the beginning of the year, and at $11.03 per share, it is trading 15% below its 52-week high of $12.98 from February 2025. Investors who bought $1,000 worth of Arhaus’s shares at the IPO in November 2021 would now be looking at an investment worth $861.88.
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