Home Furnishings Set for a Boost? Morgan Stanley Thinks So

Are you wondering if luxury home furnishings are about to get a big boost? Well, Morgan Stanley seems to think so. The investment firm just raised its outlook for RH, a high-end home furnishings company. Analyst Simeon Gutman believes RH is at the start of a positive turnaround. He even increased his target price for the stock by a whopping $95. That's a big deal, especially since the stock has been doing well, outperforming the S&P 500 by about 35% over the past year. What's behind this optimism? Gutman points to RH's new product launches. The company is rolling out more collections and sending out more catalogs. Customers are loving it, and that's good news for the stock. He also thinks that wealthy people are spending more now that they're getting richer after the pandemic. But here's something interesting: Gutman thinks the market hasn't fully understood how well RH can run its business. He expects the company to do better than many think. Even though housing turnover isn't great because of high mortgage rates, rich folks are feeling wealthier and spending more. You might be wondering about those new tariffs that could add a 10% tax on Chinese goods and a 25% tax on goods from Mexico and Canada. But don't worry, says Gutman. RH has already moved most of its sourcing away from China and is changing its exposure to Mexico. So, the impact should be minimal. While Morgan Stanley is bullish, not everyone on Wall Street agrees. About half of the analysts covering RH have a strong buy or buy rating. The rest are split between hold and underperform ratings.