Arhaus Stock Surges Over 10% on Jefferies Upgrade to 'Buy'

Shares of Arhaus Inc. (NASDAQ: ARHS) surged 10.8% on Monday after analysts at Jefferies upgraded the furniture retailer's stock to "Buy" from "Hold." The firm cited growing optimism over the company's strategy to increase brand awareness, which has resulted in a significant increase in online traffic.

Jefferies' Rationale for the Upgrade

In a note to clients, Jefferies analyst Jonathan Matuszewski pointed to the success of Arhaus's expanded catalog circulation and digital marketing efforts. The primary driver for the upgrade was a sharp rise in consumer engagement, evidenced by website traffic to Arhaus.com increasing more than 100% year-over-year for the past four weeks.

Key data points from the analyst note include:

• Website visits in August rose 104% year-over-year.
• Momentum continued into the first half of September, with traffic up 107% year-over-year.

Ad

The analyst also highlighted a business-to-business (B2B) opportunity that he believes is not fully priced into consensus estimates. This channel could add an annual comparable sales tailwind of 150-200 basis points (bps). The note described the stock's current valuation, now at parity with peers, as a "compelling entry" point.

Price Target and Outlook

Alongside the rating change, Jefferies raised its price target on Arhaus shares to $10.00, up from the previous target of $9.50. The firm's analysis suggests the catalog initiative alone could deliver a 75-200 bps lift to comparable sales in 2027.

This projection is supported by a historical 0.7 correlation between Arhaus.com visits and delivered comparable sales on a lagged basis. Jefferies also expressed confidence in recent organizational changes, including the appointment of a new Chief Marketing Officer and the ongoing search for a Chief Digital Officer, which are expected to strengthen the company's strategy.