HD Stock Ticks Higher Overnight: Home Depot’s Worst May Be Over, Say Analysts As Housing Downturn Shows Signs Of Easing

• Jefferies raised Home Depot’s price target to $398 from $360, reiterating a Buy rating.
• The firm cited market-share gains and expects easier comparisons and stronger storm-related demand to support growth. 
• DA Davidson maintained its Buy rating and $377 target, citing stronger sales and signs of an improving housing downturn. 

Home Depot (HD) stock gained overnight as Jefferies raised its price target, citing stronger-than-expected comparable sales and resilient margins. The bullish call followed a strong second-quarter (Q2) performance, with analysts noting continued market-share gains despite weak housing activity and pressure on larger discretionary home improvement projects.

Jefferies Raises Home Depot Price Target On Strong Q2 Performance

Jefferies analyst Jonathan Matuszewski increased his price target on Home Depot to $398 from $360 while maintaining a Buy rating, implying a 18% upside to the stock’s last closing price. He said the company's Q2 performance came in better than expected, with comparable-store sales exceeding forecasts and margins holding up as anticipated.

Matuszewski noted that Home Depot continued to attract customers despite what he described as "frozen" housing conditions. The retailer has managed to take share from competitors even though consumers remain cautious about larger discretionary renovation projects, which have been pressured by elevated borrowing costs.

Jefferies expects the company's comparisons to become easier in coming quarters, which could help support growth. The analyst also pointed to a return to more normal storm activity as another factor that could boost demand for repair and maintenance products, which historically benefit Home Depot's business.

Home Depot stock edged 0.2% higher overnight, Tuesday. 

DA Davidson Sees Housing Cycle Improving

DA Davidson also reiterated its ‘Buy’ rating and kept a $377 price target for Home Depot. The firm highlighted comparable sales growth of 1.7% overall and 1.3% in the U.S., describing the results as the strongest comparable-sales performance the company has posted in several years.

The analyst said the improving two-year sales trends suggest the steepest part of the housing-related spending downturn may have passed, although rising mortgage rates could still limit a broader recovery in home improvement activity.

Speaking during the Q2 earnings call, Home Depot CFO Richard McPhail highlighted broad-based demand and positive comparable sales across its Northern and Western U.S. divisions, as well as Canada and Mexico. 

“While consumer uncertainty and housing affordability continue to pressure demand for larger home improvement projects, we remain focused on what we can control,” added McPhail. 

HD Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory. 

A user said, “This is good long term value stock. Beat earnings and maintain full year guidance.”

Another user said, “home depot has lower cost of goods on raw lumber but keeps retail prices higher. Result is increased EPS.”

HD stock has dropped nearly 2% year-to-date. 

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