08:19 AM EDT, 09/13/2024 (MT Newswires) -- RH's (RH) Q2 results and guidance are "not so bad" and should result in "great" stock price reaction, Wedbush Securities analysts said in a note Friday.

RH remains confident in its forward demand potential, driven by new products with an improved price/value proposition that appears to resonate with consumers and early Q3 demand trends and positive margin inflection last month support this outlook, the brokerage said.

Wedbush said it remains sidelined due to "limited visibility" and "execution risks" associated with an "unprecedented" number of new products whose success partly depends on RH's heavy advertising and new gallery openings to attract customers. The sharp 24% year-over-year increase in inventories, compared with a 7% demand growth, underscores the risk, Wedbush said.

The firm said RH is positioning itself for higher growth but faces the risk of clearance-driven margin pressures if demand does not align with its expanded inventory

Wedbush said it maintains its neutral rating on RH but increases its target price to $310 from $250.

Price: 313.00, Change: +56.51, Percent Change: +22.03