ARHS: Future Showroom Expansion And Design Services Will Offset Macro Uncertainty

Analysts have modestly reduced their price target on Arhaus, trimming expectations by a few dollars per share to reflect a slightly higher discount rate and more conservative valuation assumptions following recent Street research updates.

Analyst Commentary

Street research updates reflect a nuanced view of Arhaus, with analysts adjusting price targets lower but maintaining a constructive stance on the company’s underlying fundamentals and execution.

Bullish Takeaways

• Bullish analysts highlight that, despite trimmed price targets, the stock still offers upside from current levels. They suggest the recent reset is more about adjusting risk assumptions than a loss of confidence in the long term story.
• They point to resilient demand trends and the company’s differentiated brand positioning as supportive of continued revenue growth, even in a more challenging macro environment.
• Profitability and margin execution are viewed as key strengths, with analysts noting that disciplined cost control and merchandising should help Arhaus defend earnings power relative to peers.
• Some see the more conservative valuation framework as creating a cleaner setup for potential future beats and raises, as expectations better align with achievable growth and execution milestones.

Bearish Takeaways

• Bearish analysts emphasize that lower price targets reflect increased uncertainty around discretionary spending and the potential for softer order trends, which could weigh on revenue growth in the near to medium term.
• There is concern that a higher discount rate and more conservative multiples are warranted given macro risk, competitive intensity, and the possibility of normalization in pandemic era tailwinds.
• Some caution that an Equal Weight stance is appropriate while visibility on backlog conversion, showroom productivity, and broader consumer health remains limited.
• Valuation is seen as less compelling after the run up in the shares. This leads more cautious voices to wait for a better entry point or clearer evidence of sustained outperformance versus the broader home furnishings category.

What's in the News

• Opened a new 12,006 square foot showroom in Bozeman, Montana, the company’s first in the state, offering curated furniture, decor, and complimentary design services in Gallatin Crossing (Key Developments).
• Updated full year 2025 outlook by raising the low end of prior guidance, now expecting net revenue of $1.35 billion to $1.38 billion, net revenue growth of 6.2% to 8.6%, and net income of $58 million to $68 million (Key Developments).
• Issued fourth quarter 2025 guidance with projected net revenue between $336 million and $366 million, net revenue growth ranging from negative 3.3 percent to positive 5.4 percent, and net income of $6 million to $16 million (Key Developments).
• Opened its largest showroom to date, a 38,600 square foot location in Old Pasadena within the historic Penn Oil Building, expanding its California footprint and providing complimentary in store and online design services (Key Developments).

Valuation Changes

• The discount rate has risen slightly, moving from approximately 9.34 percent to about 9.45 percent, reflecting a modestly higher risk premium in the updated model.
• Revenue growth remains effectively unchanged, holding near 6.83 percent in both the prior and updated assumptions.
• The net profit margin is essentially flat, staying close to 5.29 percent with only immaterial rounding differences in the updated forecast.
• The future P/E has increased marginally, ticking up from roughly 23.76x to about 23.83x, indicating a slightly higher valuation multiple applied to forward earnings.
• Fair value per share is unchanged at approximately $11.23, as small shifts in inputs offset each other in the overall valuation framework.