Debt service could be potential issue for RH, says Oppenheimer

Oppenheimer tells investors in a research note that RH last week reported weaker than expected Q3 results and lowered its FY23 guidance, reflecting a still experimental business model. The firm says RH maintains a debt service coverage ratio of 5.4x, and while Oppenheimer doesn’t suggest RH will struggle to service its debt obligations in the near-term, it remains concerned with current elevated debt and interest levels, and believes prospects for further deteriorating of the macro environment could prove incrementally more challenging for RH and other heavily indebted companies. The firm made noc hange to its Perform rating on RH shares.