4 Home Depot Analysts Offer Insights On The 'Modest Disappointment' That Was Q4

Shares of Home Depot Inc HD fell after the company announced a disappointing outlook.

• KeyBanc analyst Bradley Thomas reaffirmed a Sector Weight rating on the stock.
• Telsey Group analyst Joseph Feldman reiterated an Outperform rating, while reducing the price target from $360 to $340.
• Raymond James analyst Bobby Griffin maintained a Market Perform rating on the stock.
• Bernstein analyst Dean Rosenblum maintained a Market Perform rating, while reducing the price target from $337 to $333.

Check out other analyst stock ratings.

KeyBanc Capital Markets

• “HD reported mixed 4Q results, with EPS above, but 4Q comps and 2023 guidance below expectations,” Thomas said in a note.
• “While HD should generate relatively favorable financial results, we continue to expect subdued growth on the horizon due to elevated mortgage rates, soft housing turnover, falling home prices, and core commodity deflation,” he added.

Telsey Group

• “Home Depot met expectations for 4Q22 earnings—but the solid EPS was driven by a lower-than-anticipated tax rate, while sales and profitability missed expectations, as the company lapped a strong 4Q21 fueled by the pandemic and government stimulus, and faced a less favorable macro environment,” Feldman wrote in a note.
• “We would not be surprised if Home Depot is incorporating a degree of conservatism given the uncertain environment, and could end up exceeding expectations, as it has historically,” he added.

Raymond James

• Raymond James' Griffin is not "massively negative" on the U.S. housing industry.
• There are "favorable aspects" for home improvement demand (age of housing stock, incentives to stay in place in this interest rate environment, and home prices still up ~40% vs. pre-pandemic). "We continue to expect moderation in the industry in 2023 following record growth the past few years,” Griffin stated.

Bernstein

• “Home Depot's 4Q results were a modest disappointment vs. Cons on Comp Sales, and in line on EPS — and better than we were expecting given the softness in shopper traffic in the quarter,” Rosenblum said.
• “But our fears about a possible FY23 guide-down were realized, with FY23 guidance well below sell-side expectations, triggering a 7% sell-off on the day,” he added.

HD Price Action: Shares of Home Depot had risen slightly by 0.76% to $297.64 at the time of publication Wednesday.