RH upgraded to Overweight from Equal Weight at Morgan Stanley

Morgan Stanley analyst Simeon Gutman upgraded RH (RH) to Overweight from Equal Weight with a price target of $530, up from $435. The firm says RH’s “stepped-up” quantity and quality of new collection launches, favorable “wealth effect” at high-income households and the removal of a reversion overhang “come together at just the right time” for the shares. The company’s operating leverage is “substantial and underappreciate,” the analyst tells investors in a research note. Morgan Stanley believes that following three years of retrenchment in demand, weak housing turnover and margin compression, RH is in the early stages of a positive inflection and its long-term fundamentals “can again dominate the conversation.”