Home Depot, Inc. (NYSE: HD) shares are trading higher today. Several analysts cut the price target and lowered the estimates after second quarter FY24 earnings results reported yesterday.
Yesterday, Home Depot reported second-quarter sales growth of 0.6% year-over-year to $43.175 billion, marginally missing the consensus estimate of $43.376 billion and adjusted EPS of $4.67 (-0.2% Y/Y), beating the consensus of $4.50.
For FY24, Home Depot raised its sales guidance from $154.20 billion to $156.49 billion - $158.01 billion vs. the consensus of $158.88 billion and, expects comparable sales to decline between 3% and 4% (prior ~1%).
Stifel analyst W. Andrew Carter maintained a Hold rating and cut the price target to $375 from $380.
The analyst lowered FY24 EPS estimate to $14.81 from $14.94, reflecting the upper end of the company's updated guidance. This adjustment accounts for a $0.30 EPS headwind from acquired amortization.
The analyst projects a 3% decline in comparable sales and expects a 10 basis point increase in gross margin. Operating margin is estimated at 13.6%, down 60 basis points year-over-year, but improved by $500 million in OPEX favorability.
RBC Capital Markets analyst Steven Shemesh reiterated the Sector Perform rating with a reduced price target to $363.0 from $377.0.
The anticipated comp miss and guidance revision set up a better outlook for FY'25, assuming a lower interest rate environment, writes the analyst. However, they revised the estimates due to a weaker consumer outlook and the impact of the SRS acquisition and now forecast FY24 comp sales at -3.4% and FY25 at +1.5%, with adjusted EPS of $14.71 for FY24 and $15.13 for FY25.
KeyBanc analyst Bradley B. Thomas maintained a Sector Weight rating due to expected negative sales growth and spending headwinds.
The analyst writes that they view HD as less vulnerable to e-commerce threats compared to peers in the near term and well-positioned for future investments. The analyst lowered EPS estimates to $3.61 for the third quarter and $2.90 for the fourth quarter, reducing 2024 EPS to $14.80 and 2025 EPS to $15.30.
BofA Securities analyst Robert F. Ohmes reiterated a Buy rating with a price target of $425.
The analyst revised the FY25 EPS estimate to $15.00 (from $15.15) due to a reduced second-half comp forecast (-3.3% vs. -0.5%) and the partial-year impact of the SRS acquisition.
Despite mixed pressure from the acquisition, Ohmes expects HD's base business gross margin to benefit from lower transportation costs, reduced shrink, and cost-cutting measures.
JP Morgan analyst Christopher Horvers slashed the price target to $395 from $400 and reaffirmed an Overweight rating.
The analyst writes that August trends have improved from a weak July, aligning with a -3% annual comp forecast, suggesting a possible down 2% trend given seasonal effects. While there is potential for 2H upside, historical trends suggest that easier comparisons may not significantly boost performance.
The analyst projects a -2% to -2.5% same-store sales decline for the second half in the U.S. and -2.9% for FY24, with a recovery to 2.4% in FY25. Horvers anticipate a peak-to-trough re-rating before focusing on 2025 performance, influenced by current trends and Fed actions.
Truist Securities analyst Scot Ciccarelli reduced the price target to $395 from $396 and kept the Buy rating.
The analyst cut the 2024 and 2025 EPS estimates to $14.95 (from $15.10) and $15.40 (from $15.70), respectively, and introduced a 2026 estimate of $16.75.
Investors can gain exposure to the stock via iShares U.S. Consumer Focused ETF (NYSE: IEDI) and SPDR Select Sector Fund - Consumer Discretionary (NYSE: XLY).
Price Action: HD shares are up 2.71% at $359.55 at the last check Wednesday.