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Why Investors Are Optimistic about Home Depot's 3Q17 Earnings

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Part 5
Why Investors Are Optimistic about Home Depot's 3Q17 Earnings PART 5 OF 5

What Analysts Recommend for Home Depot ahead of 3Q17 Earnings

Target price

As of November 9, 2017, Home Depot (HD) was trading at $163.27. As of this day, analysts are expecting the company’s stock price to reach $172.83 in the next 12 months, which represents a return potential of 5.9%.

What Analysts Recommend for Home Depot ahead of 3Q17 Earnings

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HD’s increased 2017 EPS guidance, the recovery efforts after the hurricane devastation, and a favorable macro environment appear to have compelled analysts to raise their target price. On November 6, 2017, RBC had raised its target price from $179 to $183. On October 25, 2017, Morgan Stanley had also increased its target price from $173 to $175. Before the announcement of 2Q17 earnings, analysts had forecasted a 12-month target price of $171.27.

The return potential of Home Depot’s peers are as follows:

  • Lowe’s Companies (LOW): Target price of $85.41 with return potential of 9.4%
  • Williams-Sonoma (WSM): Target price of $49.79 with return potential of 1.7%
  • Bed Bath & Beyond (BBBY): Target price of $23.94 with return potential of 18.8%

Analyst ratings

Of the 33 analysts that follow Home Depot, 72.7% are recommending a “buy,” and the remaining 27.3% are recommending a “hold.” None of the analysts are recommending a “sell.” On November 6, 2017, Key Banc initiated the coverage of Home Depot with a “sector weight” rating.

Currently, Home Depot is trading below analysts’ earnings estimate. However, this doesn’t mean an automatic “buy.” Investors should carefully analyze various parameters discussed in our earlier articles before making any investment decisions.

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