Home Depot, Inc. HD Shares are trading higher today, with several analysts cutting price targets and revising estimates downward following second-quarter fiscal 2024 earnings guidance released yesterday.
Yesterday, Home Depot reported second-quarter revenue growth of 0.6% year-over-year to $43.175 billion, just missing the consensus estimate of $43.376 billion. Adjusted earnings per share were $4.67 (-0.2% year-over-year), beating the consensus estimate of $4.50.
For FY24, Home Depot raised its revenue forecast to $156.49 billion from $154.20 billion – $158.01 billion versus consensus of $158.88 billion – and expects comparable sales to decline 3% to 4% (previously ~1%).
Boots Analyst W. Andrew Carter maintained a “hold” rating and lowered the price target from $380 to $375.
The analyst lowered the fiscal 2024 earnings forecast to $14.81 from $14.94, which is the high end of the company’s updated guidance. This adjustment takes into account an earnings headwind of $0.30 per share due to the amortization of acquisitions.
The analyst forecasts a 3% decline in comparable sales and expects gross margin to increase by 10 basis points. Operating margin is estimated at 13.6%, down 60 basis points year-on-year, but with an improvement of $500 million in OPEX.
RBC Capital Markets Analyst Steven Shemesh reiterated the “Sector Perform” rating with a reduced price target from $377.0 to $363.0.
The expected revenue decline and forecast adjustment led to a better forecast for fiscal 2025, assuming a lower interest rate environment, the analyst writes. However, they revised estimates due to a weaker consumer forecast and the impact of the SRS acquisition and now forecast a revenue decline of -3.4% for fiscal 2024 and a revenue decline of +1.5% for fiscal 2025, with adjusted earnings per share of $14.71 for fiscal 2024 and $15.13 for fiscal 2025.
KeyBanc Analyst Bradley B. Thomas maintained the sector weight rating due to expected negative revenue growth and spending headwinds.
The analyst writes that he sees HD as less vulnerable to e-commerce threats in the near term compared to its peers 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 the buy recommendation with a price target of $425.
The analyst revised the FY 2025 EPS forecast upwards to $15.00 from $15.15, reflecting a reduced second-half comparative forecast (-3.3% vs. -0.5%) and the impact of the SRS acquisition for part of the year.
Despite the pressures resulting from the acquisition, Ohmes expects HD’s base business gross margin to benefit from lower transportation costs, reduced shrinkage and cost-cutting measures.
JPMorgan Chase & Co. Analyst Christopher Horvers lowered the price target from $400 to $395 and reiterated the “overweight” rating.
The analyst writes that August trends improved from a weak July, consistent with a year-over-year forecast of -3% and suggesting a potential 2% downside given seasonal effects. While there is potential for upside in the second half, historical trends suggest that simpler comparisons may not significantly drive performance.
The analyst forecasts a decline in like-for-like sales of -2% to -2.5% in the US for the second half of the year and a decline of -2.9% for FY24, with a recovery to 2.4% in FY25. Horvers expects a reassessment of peak-to-trough before focusing on the 2025 performance, which will be influenced by current trends and Fed actions.
Trust securities Analyst Scot Ciccarelli lowered the price target from $396 to $395, but maintained the buy rating.
The analyst lowered EPS estimates for 2024 and 2025 to $14.95 (from $15.10) and $15.40 (from $15.70), respectively, and provided an estimate for 2026 of $16.75.
Related: Home Depot analysts lower forecasts after second-quarter results
Investors can participate in the share via iShares US Consumer Focused ETF IEDI And SPDR Select Sector Fund – Consumer Discretionary XLY.
Price promotion: HD shares rose 2.71% to $359.55 at last check on Wednesday.
Disclaimer: This content was created in part using AI tools and reviewed and published by Benzinga editors.
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