Home Depot Hovers Near Record High Ahead of Q3 Earnings; Target Price $400 in Best Case
Home Depot Inc, the largest home improvement retailer in the United States, is expected to report its third-quarter earnings of $3.39 per share, which represents year-over-year growth of about 7% from $3.18 per share seen in the same period a year ago.
The home improvement retailer would post revenue growth of over 4% to $34.942 billion from $33.54 billion a year earlier. In the last two years, the company has beaten earnings per share (EPS) estimates in most of the quarters with a surprise of over 5%.
Home Depot shares have gained nearly 40% so far this year. At the time of writing, the stock was trading 1.02% higher at $371.41 on Friday. Home Depot’s better-than-expected results, which will be announced on Nov 16, could help the stock hit new all-time highs.
Analyst Comments
“Shares of Home Depot have risen and outpaced the industry year to date. The company boasts a robust surprise trend with the fifth straight quarter of earnings and sales beat in second-quarter fiscal 2021. Results gained from continued demand for home improvement projects, the robust housing market and ongoing investments. The company is effectively adapting to the demand for renovations and construction activities, driven by prudent investments,” noted analysts at ZACKS Research.
“It is gaining from growth in Pro and DIY customer categories as well as digital momentum. However, in the second quarter, the company witnessed year-over-year moderation in its comparable-store sales growth. This was due to the lapping of the high demand environment for home-improvement projects seen last year. Soft gross margin, stemming from increased penetration of lumber, has also been a drag.”
Home Depot Stock Price Forecast
Twelve analysts who offered stock ratings for Home Depot in the last three months forecast the average price in 12 months of $373.60 with a high forecast of $400.00 and a low forecast of $325.00.
The average price target represents a 0.70% change from the last price of $371.00. From those 12 analysts, 11 rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.
Technical analysis suggests that it is good to buy as 100-day Moving Average, and 100-200-day MACD Oscillator hints at a strong buying opportunity.
Morgan Stanley gave the base target price of $370 with a high of $455 under a bull scenario and $240 under the worst-case scenario. The firm gave an “Overweight” rating on the home improvement retailer’s stock.
“We are Overweight Home Depot (HD) given its best-in-class nature and structural housing tailwinds beyond N-T disruption from COVID-19. The stock seems attractively valued in the context of a potential 2021/2022 economic/housing boom,” noted Simeon Gutman, equity analyst at Morgan Stanley.
Several other analysts have also updated their stock outlook. Telsey Advisory Group lifted the target price to $390 from $370. Citigroup upped the price target to $418 from $375. JPMorgan raised the target price to $397 from $340.
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This article was originally posted on FX Empire
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