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Why Home Depot Is Trading Close to Its 52-Week High

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Part 3
Why Home Depot Is Trading Close to Its 52-Week High PART 3 OF 3

What Analysts Recommend for Home Depot

Target price

As of October 5, 2017, analysts are expecting Home Depot’s (HD) stock price to reach $171.18 in the next 12 months, which represents a return potential of 3.1% from its current stock price.

What Analysts Recommend for Home Depot

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Of the 32 analysts that follow Home Depot, 75.0% are recommending a “buy,” and the remaining 25.0% are recommending a “hold.” None of the analysts are recommending a “sell.” On September 5, 2017, Bank of America Merrill Lynch initiated coverage of Home Depot with a “buy” rating and a target price of $170.0, which represents a return potential of 2.3%.

Peer comparisons

Of the 31 analysts that follow Lowe’s Companies (LOW), 54.8% are recommending a “buy,” 41.9% are favoring a “hold,” and 3.2% are recommending a “sell.” On average, analysts are expecting the company’s stock price to reach $84.19, which represents a return potential of 3.8%.

Of the 27 analysts that follow Williams-Sonoma (WSM), 25.9% are recommending a “buy,” 63.0% are recommending a “hold,” and 11.1% are favoring a “sell” option. In the next 12 months, analysts are expecting the company’s stock price to reach $50.16, which represents a fall of 2.2% from its current stock price.

Of the 21 analysts that follow Bed Bath & Beyond (BBBY), 4.2% are recommending a “buy,” 66.7% are favoring a “hold,” and 29.2% are recommending a “sell.” Analysts have forecasted a 12-month target price of $24.58, which represents a return potential of 5.7%.

Valuation multiples

As of October 5, 2017, Home Depot was trading at a forward PE (price-to-earnings) multiple of 20.9x, while peers Lowe’s Companies (LOW), Williams-Sonoma (WSM), and Bed Bath & Beyond (BBBY) were trading at 16.8x, 13.7x, and 8.1x, respectively. Compared to its peers, Home Depot enjoys higher margins, which allows the company to trade at a higher valuation multiple.

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