Home Depot Stock Slapped With Price-Target Cuts After Q1 Beat: Retail Feels Downside Is Already Priced In

• DA Davidson analyst Michael Baker cut the price target on HD to $377 from $445.
• Baker warned that higher interest rates could delay a broader economic recovery.  
• Truist lowered its price target to $369 while maintaining a Buy rating and flagged long-term upside potential stemming from underinvestment across the industry. 

Home Depot (HD) received a series of price-target cuts from Wall Street analysts after the home improvement retailer reported its fiscal first-quarter (Q1) earnings, even as the CEO pointed to improving sales activity in May. 

However, the trimmed price targets still implied upside potential of 19% to 25%.

On Tuesday, the company posted Q1 revenue of $41.8 billion and adjusted earnings per share of $3.43, both edging past the analysts’ consensus estimates of $41.5 billion and $3.41, respectively, according to Fiscal AI data. 

Higher Interest Rates Continue To Cloud HD’s Growth  

On Tuesday, DA Davidson analyst Michael Baker reduced his price target on HD to $377 from $445 while maintaining a ‘Buy’ recommendation. Baker said management’s remarks during the earnings call indicated that business trends improved in May after demand weakened in the second half of April.

“And then as we turn the corner into May and saw much more favorable weather, if you will, or consistent weather, particularly in the North, we saw that same engagement through the first couple of weeks of May,” Home Depot CEO Edward Decker said in the Q1 earnings call. 

However, Baker cautioned that elevated borrowing costs may delay the expected broader macroeconomic recovery. Data from the U.S. Bureau of Labor Statistics showed U.S. inflation for the month of April climbed 3.8% year-on-year, its fastest pace since 2023. 

Wolfe Research analyst Spencer Hanus also trimmed his price target, lowering it to $365 from $416 while keeping an ‘Outperform’ rating. Hanus said Q1 performance came in stronger than many investors had feared. 

He added that while April sales volatility raised concerns ahead of earnings, management avoided issuing the type of sharply negative consumer commentary some market participants expected.

Home Depot’s stock edged 0.02% lower overnight, late Tuesday. 

Jefferies And Truist See Long-Term Upside For HD 

Jefferies cut its price target on the retailer to $361 from $454 and reiterated its ‘Buy’ rating. The firm said comparable sales growth fell short of broader Wall Street expectations but remained generally aligned with company guidance. 

Analysts also pointed to signs of healthier demand entering the second quarter and said Home Depot could continue expanding its professional contractor business through additional cross-selling opportunities.

Truist analysts cut their price target on Home Depot to $369 from $394 but kept a Buy rating. The firm said the company’s sales and earnings were mostly in line with expectations, with slight growth in comparable-store sales and margins. 

Truist also said that industry-wide underinvestment could create favorable upside potential for the company over time.

What Retail Traders Feel About Home Depot

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

A user said, “Mortgages, home equity loans, and renovation financing are all more expensive, which could delay many big-ticket home improvement projects,” and added, “In this environment, I also find myself wondering: are investors maybe overestimating the rate impact while overlooking the company’s resilience?”

Another user said, “Fools are trying to rip apart earnings. What they don't understand is the downside and sluggishness is already priced in the stock now.” 

HD stock has declined by over 12% year-to-date. 

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