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Can Home Depot’s 2Q17 Earnings Outperform Analysts’ Estimates?

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Part 6
Can Home Depot’s 2Q17 Earnings Outperform Analysts’ Estimates? PART 6 OF 6

Analyst Recommendations for Home Depot ahead of 2Q17 Earnings

Target price

Despite the recent fall in Home Depot (HD) stock, analysts have raised their 12-month target price to $171.27, from $159.21 before the announcement of the company’s 1Q17 earnings. The new target price represents a return potential of 10.3%.

Analyst Recommendations for Home Depot ahead of 2Q17 Earnings

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The better-than-expected 1Q17 earnings and higher EPS guidance for 2017 could have compelled analysts to raise their target price. Analysts are expecting the deal between Amazon and Sears to have little effect on Home Depot since the Kenmore brand is not available at Home Depot stores. Also, Home Depot and Lowe’s already command one-third of US home appliance sales, according to Euromonitor International.

After Home Depot announced its 1Q17 earnings, BMO Financial Group, Telsey Advisory Group, and Barclays raised their target prices. On May 17, 2017, BMO Financial Group raised its target price from $155 to $176. That same day, Telsey Advisory Group raised its target price from $154 to $175, and Barclays raised its target price from $150 to $164.

Below are the target prices and return potentials of Home Depot’s peers:

  • Lowe’s Companies (LOW): target price of $88.69, which represents a return potential of 13.2%
  • Bed Bath & Beyond (BBBY): target price of $32.32, which represents a return potential of 8.5%
  • Williams-Sonoma (WSM): target price of $52.65, which represents a return potential of 13.0%

Analyst ratings

Of the 33 analysts that are following Home Depot, 71.0% are recommending a “buy,” and the remaining 29.0% are recommending a “hold.” None of the analysts are recommending a “sell.”

Home Depot’s target price is higher than the company’s current stock price. However, that doesn’t mean an automatic “buy.” We have to carefully analyze all the analysts’ estimates that we covered in this series before making any investment decisions.

For more news, be sure to visit Market Realist’s Home Improvement Retailers page.

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