RH (RH) faces ongoing margin pressure from higher freight and input costs, which are expected to offset most of the tariff refund benefit while investor focus shifts to the rollout of its Estates offering, BofA Securities said in a Friday note.

BofA noted that RH raised its fiscal 2026 adjusted EBITDA margin guidance, with the increase driven entirely by tariff refunds, while higher Vietnam tariffs add further pressure as the country accounts for a significant share of RH's imports.

RH's fiscal Q3 adjusted EBITDA margin guidance of 12.5% to 13.5% trailed BofA's 19.1% and consensus' 19%, while Q4 revenue growth guidance was 16.1% to 21.2%, with Estates expected to add 8 percentage points, the note said.

BofA said execution of the Q4 outlook and Estates rollout could boost 2027 estimates, while limited housing improvement and higher international startup and preopening expenses of 340 basis points remain concerns.

BofA reiterated its underperform rating on the stock and lowered its price target to $114 from $156.

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