Buy this retailer secretly buying back its stock, Bank of America says

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RH ‘s acclerated share repurchases over the last few weeks is boosting Bank of America’s confidence in the home furnishings retailer. Analyst Curtis Nagle reiterated his buy rating on the stock in a note to clients Wednesday, highlighting that the company repurchased nearly $400 million of its shares, the largest buyback since 2017. It brings the yearly total to an estimated $676 million. “We view the increased buybacks as a potential sign of increased confidence in the business by RH senior leadership,” Nagle wrote. “While trends are not likely to have materially changed since RH reported 3Q results on December 9, RH’s CEO did state that he was ‘never more excited about our future’ and shares are only trading at 14.5x 2023 EPS.” Shares of RH suffered in 2022, falling 50% as investors veered out of consumer discretionary stocks. The bank’s $338 price target implies 22% upside from Wednesday’s close. Despite near-term headwinds, Nagle expects RH to experience double-digit sales growth and greater than $30 in earnings per share over the next two to three years. The opening of the first international gallery should also offer new channels, he added. “While trends are likely to remain challenged near term on macro uncertainty and pressure from a housing downturn, RH is a proven share taker with pricing power and ample initiatives to drive long-term growth,” he said. — CNBC’s Michael Bloom contributed to this report.