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Summary

  • Home Depot, a leader in the home improvement retailing segment, received a price target increase from Jeffries on Monday.
  • Jeffries raised its price target on Home Depot from US$349 to US$370 as it sees long-term demand in the segment.
  • Home Depot’s stock price moved 2% higher in early trading on July 10, 2023, following Jeffries’ upward revision in its price target.

Home Depot is a leader in the home improvement retailing segment, with over 1 million products available online and 30,000 products available in stores across the US. The company also started maintenance, repair, and operations businesses after acquiring distributor Interline Brands in 2015.

Equity analyst Jeffries raised its price target on Home Depot as per a EODHD/Others report dated July 10, 2023. The broker raised its price target on Home Depot from US$349 to US$370 as it sees long-term demand in the segment.

As per EODHD/Others data, Home Depot has a consensus mean price target of US$ 315.05 as on July 10, 2023. This is 1.54% higher than its closing price on that day.

Image source: ©2023 Kalkine®; Data source: EODHD/Others

Meanwhile, analysts have given HD a mean recommendation rating of 2.3 on a scale of one to five. A total of 39 analysts have covered the stock, among which 22 analysts believe HD is a ‘strong buy’ or ‘buy’. Additionally, fifteen analysts have given HD a ‘hold’ rating and one analyst has given it a ‘sell’ and another analyst has given HD a ‘strong sell’ rating.

HD’s shares move higher as Jeffries lifts its price target

Home Depot’s stock price moved 2% higher in early trading on July 10, 2023, as Jeffries raised its price target on the stock. The higher price target comes on the back of consistent demand that can be expected in the home improvement sector as per Jeffries.

Commenting on the sector outlook, the broker stated that the underlying age of US housing stock creates credible base of demand that can materialize with high probability. The houses have an age of over ten years, which means that they would often require refurbishment such as a fresh coat of paint, new smoke detectors, new water heater and new roofing.

Thus, rising home ages point to increased expenditure in home improvement. As per Jeffries, homeowners spend an incremental amount of US$259 every year as against prior outlays when their house becomes 10 years old. This annual incremental amount increases by US$ 1,248 when the house turns 20 and by US$ 812 when the house turns 50.

HD closed at US$ 310.28 on July 10, 2023, after an intraday increase of 2.46%. The stock hit its 52-week high of US$ 347.2 on December 13, 2022.

Home Depot’s financial performance in Q1 FY23

Home Depot’s financial performance for the first fiscal quarter of 2023 showcased a decline in earnings as compared to the previous corresponding period. The retailer reported sales of US$ 37.3 billion for Q1 FY23, which was 4.2% lower than that in Q1 FY22.

Meanwhile, the net earnings for Q1 FY23 were US$ 3.9 billion or US$3.82 per diluted share (diluted EPS), as against net earnings of US$ 4.2 billion or US$ 4.09 per diluted share in Q1 FY22. The company stated that the results for the quarter came in lower than expected primarily due to lumber deflation and unfavorable weather.

At the same time, Home Depot expects sales and comparable sales for fiscal 2023 to fall between 2% and 5% compared to fiscal 2022. It also expects diluted EPS to decline between 7% and 13% compared to FY22. Meanwhile, it expects sales growth between 3% and 4% per year, in its market stability base case outlook