Truist Securities has adjusted its outlook on Home Depot (NYSE: NYSE:HD), reducing the price target to $396 from the previous $406 while maintaining a Buy rating on the company's stock.
The revision on Thursday comes as the analyst anticipates a downturn in Home Depot's second-quarter U.S. comparable sales, now expecting a 2.5% decline compared to the earlier estimate of a 1.0% drop.
The reassessment by Truist Securities is partly due to insights from their proprietary card data. It also serves as a preemptive recalibration of their model in anticipation of Home Depot's forthcoming guidance update. The recent acquisition of SRS Distribution by Home Depot is another factor that has been considered in the revised forecast.
While Truist Securities continues to foresee a rebound in home improvement activities, the exact timing of this resurgence is noted as uncertain. The analyst has raised a "Yellow (OTC:YELLQ) Flag" as a sign of incremental caution, highlighting a slight increase in existing home inventory levels.
Meanwhile, Home Depot's financial performance has been the subject of several analyst revisions. Truist Securities adjusted its price target for the company to $396, citing an anticipated downturn in second-quarter U.S. comparable sales.
Stifel also adjusted its price target for Home Depot, setting it at $380 in light of the company's recent acquisition of SRS Distribution, which is expected to add $10 billion in annualized revenue.
The SRS acquisition has also led to revised earnings per share (EPS) estimates from Stifel, projecting $15.04 for FY24 and $15.75 for FY25. Home Depot has also made significant strategic moves, such as terminating its $10 billion revolving credit facility and promoting Jordan Broggi to executive vice president of customer experience and president of online.
InvestingPro Insights
Home Depot (NYSE:HD) continues to demonstrate a robust financial profile according to recent metrics from InvestingPro. With a market capitalization of $365.07 billion and a P/E ratio of 24.84, the company shows significant size and earnings power. Notably, Home Depot has been able to maintain a consistent dividend payout, increasing it for 14 consecutive years and maintaining payments for 38 years. This track record underlines the company's commitment to returning value to shareholders, which is particularly appealing during uncertain economic times.
The InvestingPro Tips highlight Home Depot as a prominent player in the Specialty Retail industry, operating with a moderate level of debt. These factors, combined with the analysts' predictions of profitability this year and a high return over the last decade, suggest a stable investment. The company's ability to stay profitable over the last twelve months, despite a slight decline in revenue growth, further attests to its operational efficiency. For those considering an investment in Home Depot, there are additional insights available, with a total of 8 InvestingPro Tips listed on the platform.
Investors may also find the dividend yield of 2.44% to be a compelling aspect of the company's financial health, coupled with a dividend growth of 7.66% in the last twelve months. Although the price is currently at 92.77% of its 52-week high, the fair value estimates from analysts and InvestingPro suggest there could be potential for growth, with figures at $395 and $336.69 respectively. The next earnings date set for August 13, 2024, will be an important event for investors to watch for further insights into the company's performance.
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