shares of recovery hardwareor R.H RHsaw a sharp drop of 7.53% on Monday in response to the latest disclosures the home furniture company made on Feb. 3.

These disclosures highlight several challenges that are expected to impact RH’s performance in the near term.

The Analyst: Telsey Advisory Group (TAG) downgraded RH to Market Perform from Outperform but raised the price target to $330 from $310.

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RH updated its 2022 guidance range with the now expected revenue decline at the lower end of its previous range of (4.5%)-(3.5%) versus TAG’s estimate of (4.1%).

The company also updated its operating margin at the high end of its earlier guidance of 21.5% to 22.0% versus TAG’s estimate of 22.1%.

Worse still, RH announced that it found “several errors” in its financial statements that impacted its GAAP basic and diluted EPS. The company has reviewed these errors and plans to make changes that will impact its adjusted EPS.

Check out more analyst reviews, Here.

Another factor affecting RH’s market prospects is its recent purchase of 3.7 million shares, which cost the company around $1 billion.

This share repurchase is intended to offset the issuance of 4 million shares under the Corte Madera, California-based company’s 2023 stock incentive plan. Despite these changes, TAG found that RH is still seen as a strong brand with medium to long-term growth potential.

TAG expects revenue to decline in 2023 and operating margins to decline, resulting in a lower EPS estimate for both 2022 and 2023.

Price promotion: Shares of RH are trading down 7.53% to $317.75, according to data released on Monday Gasoline Pro.