RH (RH) could see solid sales in its fiscal Q4 results next week, but margin performance could be slightly soft, Wedbush said in a Wednesday note.

Wedbush analysts said they saw "upside potential" in their demand and sales forecast for the company's fiscal Q4, which could translate to sales growth of roughly 12%. The growth was driven by market share gains on the company's newer and more affordable collections, as well as the early release of its sourcebook, RH Modern, they said.

Incremental discounting activity could result in a modest miss on margins for the quarter, the analysts said, adding that clearance and discount activity rose in the period, with the company running more frequent sales events on a wider range of products.

The analysts said they expect the company to release 2025 sales guidance in line with expectations and margin guidance slightly below consensus, despite markdown activity and recession risks.

Wedbush reduced the price target on the company's stock to $350 from $500 but kept its outperform rating.

Price: 243.40, Change: -9.50, Percent Change: -3.76