On Friday, Piper Sandler, a well-known investment firm, increased its price target for Arhaus Inc (NASDAQ: NASDAQ:ARHS) stock to $15.00, up from the previous target of $14.00, while reiterating an Overweight rating on the shares.
Currently trading at $9.46, the stock sits well below its 52-week high of $19.81, though InvestingPro data shows it maintains a "Fair" overall financial health score. The adjustment came after Arhaus issued a press release on Wednesday, which presented a mix of positive and negative news.
Arhaus, a premium home furnishings retailer, announced a departure within its executive team, as CFO Dawn Phillipson decided to leave the company. This move follows a series of executive team departures in recent months, which Piper Sandler acknowledges as a point of concern.
According to InvestingPro, the company has maintained profitability over the last twelve months with a healthy gross profit margin of 46.55%, despite these management changes. Subscribers can access 8 additional ProTips and comprehensive analysis through InvestingPro's detailed research reports.
Despite the executive changes, Arhaus reported better-than-expected sales results for the fourth quarter. The company revealed a demand comp of +6%, which indicates a robust +10% for November and December combined. This performance is particularly notable as it addresses concerns that competition from rivals, such as RH (NYSE:RH), copying Arhaus products, could disrupt sales.
Piper Sandler's analyst commented on the dual nature of the recent announcement, expressing a more positive view of Arhaus's fundamental outlook for 2025, while also recognizing the potential operating risks associated with the management transitions. The investment firm highlighted that Arhaus is currently trading at a notable discount to its peers on an EBITDA basis.
The price target of $15.00 is based on a 12x target multiple assumption, which reflects the potential risks and rewards associated with the company's current position and expected performance. The company currently trades at an EV/EBITDA multiple of 12.36x and a P/E ratio of 18.79x. Piper Sandler's continued Overweight rating suggests that they believe Arhaus's stock still has room to grow despite the recent executive team shifts.
InvestingPro analysis indicates the stock is currently overvalued based on its proprietary Fair Value model, with additional insights available in the comprehensive Pro Research Report.
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