RH Rises As Citron Research Sees Suitors Lining Up To Buy 'Rare Trophy Asset'

Shares of RH (RH) are on the rise on Thursday morning after Citron Research called it "the most compelling story in retail", and said it sees suitors lining up to buy "this rare trophy asset with 0 competition." Citron set a $250 price target on the stock.

'MOST COMPELLING STORY' IN RETAIL: Andrew Left's Citron Research said in a newly published report that RH has created "the most exciting concept in retail since the creation of the Apple [AAPL] store," and has become a company with no peer, with "no competition domestic or international." Setting a $250 price target on the stock, Citron argued that RH has become the only significant anchor tenant for shopping districts amid the decline of physical retail, which allowed it to secure new galleries at a rent per square foot that is about 50% lower than their prior mall-based stores. "What RH has built in North America over the past six years is nothing short of breathtaking.

But, what is most exciting is the future of RH internationally," the report noted. Moreover, Citron pointed out that the stock is currently being valued on par with Ethan Allen (ETH), La-Z-Boy (LZB), and Williams Sonoma (WSM). "Once Wall Street wakes up and realizes that RH is to furniture what Whole Foods [AMZN] is to groceries, the multiple will readjust higher," the report contended. Citron does not believe RH will stay public for much longer as the value of the company "is clear" and the firm expects an offer to be made that the company will not be able to refuse. "As large shareholders, we would be disappointed if RH sold for anything less than $250 a share. This would still make it less expensive than Wayfair [W]," the report added.

PRICE ACTION: In late morning trading, shares of RH have gained almost 4% to $135.50.

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