3 Home Depot Analysts On Retailer's Q2 Earnings Beat: 'Longer-Term Outlook Remains Favorable'

Home Depot Inc HD reported quarterly earnings and revenues ahead of Street expectations Tuesday and reiterated its 2022 guidance.

Raymond James On Home Depot

Analyst Bobby Griffin reaffirmed an Outperform rating while raising the price target from $340 to $350.

Although Home Depot’s quarterly results were “solid,” there seems to be “some investor concern that the housing market could turn less favorable for HD following the step-up in interest rates via reduced housing turnover and ultimately falling home values,” Griffin said in a note.

Related Link: Home Depot Beats On Q2 Aided By Home Improvement Project Demand; Reaffirms FY22 Guidance

While sales trends were strong, inventory levels remain a concern area, with a year-on-year increase in the quarter, he added.

“Overall, while we acknowledge the near-term investor sentiment on HD and other durable related retailers likely remains challenging with macro uncertainty, we maintain our view that the longer term outlook remains favorable (~17% market share of a ~$900 billion TAM),” the analyst further wrote.

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Telsey Advisory Group On Home Depot

Analyst Joseph Feldman maintained an Outperform rating and $375 price target.

Home Depot’s earnings beat was driven by “strong sales growth and solid expense management, despite challenges from colder weather causing a later start to the spring selling season and lapping a strong 2Q21 fueled by the pandemic and government stimulus,” Feldman said in a note.

“The solid demand trend, combined with multiple strategic initiatives, should drive continued outperformance,” he added.

“Home Depot also has a flexible business model, which gives us confidence the company can achieve its targets …The company should continue to benefit from favorable macro support — higher home prices and remodeling activity,” the analyst further stated.

Credit Suisse On Home Depot

Analyst Daniel Oppenheim reiterated an Outperform rating and price target of $450.

“We are maintaining our 2Q22 estimate of $16.85 based on the upside from 2Q, offset by some conservatism in 3Q and 4Q based on slightly more difficult comps,” Oppenheim said in a note.

Although Home Depot faces more challenging comps in the back half of the year, it has made a strong start to the third quarter, he added.

HD Price Action: Shares of Home Depot were down 0.29% at $326.60 Wednesday afternoon. 

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