Citi analyst Geoffrey Small raised his price target for RH to $135 following last night's Q3 results.

The company formerly known as Restoration Hardware is down $1.37 to $102.50 in premarket trading.

As RH demonstrates ongoing sales strength and improves its margins to the 9%-10% level targeted for 2018, both short-covering and long interest should put upward pressure on the stock price, Small tells investors in a research note. He keeps a Buy rating on the company.