Last week, RH (NYSE:RH) reported an earnings miss for the third quarter, but raised its guidance.

Despite overall furniture demand remaining soft, the company witnessed better-than-expected demand trends in the third quarter and so far in the fourth quarter, which suggests market share gains, according to Telsey Advisory Group.

Analyst Cristina Fernández upgraded the rating for RH from Market Perform to Outperform, while raising the price target from $485 to $500.

The RH Thesis: While the company had reported a 13% increase in total demand in the third quarter and 18% in November, December trends have accelerated further, Fernández said in the upgrade note.

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"RH accelerated the pace of product introductions in 2024," some of which are at more accessible prices, allowing price-sensitive consumers to return, the analyst stated. The company has additional product introductions scheduled for 2025, which could "meaningfully expand the market size and share of RH in 2026," she added.

RH's strong demand trend is likely to continue in 2025, with more products introduced, the housing market beginning to recover, and new store openings in key European markets, Fernández further stated.

RH Price Action: Shares of RH were down 2.7% to $385.99 at the time of publication Thursday.

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