Can Home Depot Survive The Current Hosing Market Headwinds? Analyst Discusses Future

Telsey Advisory Group analyst Joseph Feldman reiterated a Market Perform rating on the shares of Home Depot Inc HD with a $315 price target.

Home Depot's 2Q23 EPS declined 8% Y/Y to $4.65, beating the analyst consensus estimate. Also, sales exceed at $42.9 billion (Telsey estimate $41.9 billion; Fact Set $42.2 billion), with a comp of (2.0%), including a U.S. comp of (2.0%), versus Telsey’s estimate of (4.5%).

Overall, the analyst thinks Home Depot executed superbly amidst broad-based pressure from the tougher consumer spending environment and soft housing market trends.

Tickets increased 0.1%, pointing to less inflation and lower spending on big ticket, discretionary categories and projects and transactions declined 1.8% vs. a decline of 3.0% last year, said the analyst.

Also, the analyst noted that Home Depot's better-than-anticipated 2Q23 sales bodes positively for Lowe's Companies Inc LOW, which reports 2Q23 earnings on August 22.

HD still expects 2023 comparable sales of (5%)-(2%), reflecting the uncertain economic environment and slower housing market.

The stock could be range bound until investors gain more confidence that the business has stabilized and there will not be the need to reduce estimates in 2H23, particularly as negative housing market trends remain in the near term.

Price Action: HD shares are trading higher by 0.55% at $331.7 on the last check Tuesday.