Home Depot Inc
The results came amid an exciting earnings season. Here are some key analyst takeaways.
Truist Securities On Home Depot
Analyst Scot Ciccarelli reiterated a Buy rating while cutting the price target from $417 to $406.
Home Depot reported its first-quarter results broadly in line with expectations, with comps down 2.8%, Ciccarelli said. While the company was tracking short of expectations for most of the quarter, "trends improved as Spring weather arrived later in April," he added.
Comps for Complex Pros were positive "in markets where it has invested in its supply chain and outside sales force," the analyst wrote. He further stated that pricing pressures could ease through the year and "should be an incremental driver to comp performance" in the back half of the year.
BofA Securities On Home Depot
Analyst Robert Ohmes maintained a Buy rating and price target of $425.
Despite a higher-than-expected decline in comps, Home Depot reported earnings of $3.63 per share, exceeding consensus of $3.60 per share due to a lower tax rate, Ohmes said. Operating margins contracted by 95 basis points (bps) year-on-year to 13.9%, missing expectations of 14.1%, he added.
"Comp sales were negatively impacted by a delayed start to spring and softness in larger discretionary projects," the analyst wrote. Although the macro environment remains "choppy," Home Depot could continue gaining market gains as it accelerates growth and capabilities with Complex Pro, he further stated.
Mizuho Securities On Home Depot
Analyst David Bellinger reaffirmed a Buy rating and price target of $415.
Although Home Depot's comp sales in the quarter were soft, the company "continues to manage the controllables well with nearly +50 bps of gross margin expansion and more stringent cost controls," Bellinger said. He added that big ticket items continued to decline, with comps for transactions over $1,000 down by 6.5% in the first quarter, after a 6.9% decline in the previous quarter.
"Demand trends are still choppy into early Q2, whereas we had expected a more positive tone to come forward on the call regarding early May trends," the analyst wrote.
He further stated Home Depot was likely to achieve its full-year guidance, "particularly given average selling price pressures to fade in coming quarters."
DA Davidson On Home Depot
Analyst Michael Baker maintained a Neutral rating and price target of $370.
While Home Depot's comps were softer than expected, they were slightly better than in the fourth quarter, Baker said.
While ticket and traffic both declined in the quarter, gross margins "were a bright spot," expanding by 44 bps to 34.1%, the analyst added. The company maintained its full-year guidance, "which still calls for better comps in the second half and to us is as much dependent on macro factors as it is on HD's own execution," he further stated.
JPMorgan On Home Depot
Analyst Christopher Horvers reiterated an Overweight rating on the stock.
Home Depot reported mixed results, with an earnings beat and disappointing comps, Horvers said.
The company reiterated its guidance of a 1% decline in comps, 1% sales growth, gross margin of 33.9%, and earnings growth of 1%, the analyst stated.
"Notably, the guidance does not reflect any impacts from the pending acquisition (of SRS Distribution) and no change was made to the outlook given share repurchases have been halted to fund the deal," he added.
KeyBanc Capital Markets On Home Depot
Analyst Bradley Thomas reaffirmed a Sector Weight rating on the stock.
"HD's 1Q was uneventful, with many questions about weather and the outlook for housing, but few material updates," Thomas wrote in a note. The decline in comps reflected "continued softness in discretionary projects and a delayed start to spring," he added.
"Looking ahead, we see a compelling recovery opportunity over the next several years but expect the industry to remain challenged over the next 6-12 months due to headwinds facing the consumer, the weak housing market, and uncertainty over potential interest rate cuts," the analyst wrote.
HD Price Action: Shares of Home Depot had risen by 2.20% to $348.00 at the time of publication on Wednesday.
