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Why Analysts Are Favoring ‘Buys’ on Home Depot

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Analysts’ target prices

On February 22, 2017, Home Depot (HD) stock was trading at $145.25. This price may have already factored in the estimates we’ve discussed in this series. 

In this final article, we’ll look at analysts’ recommendations and estimated target prices for the stock over the next 12 months.

Home Depot’s strong 4Q16 earnings and positive 2017 outlook appear to have compelled analysts to raise their consensus target price for the company over the next 12 months to $154.6. Before its 4Q16 earnings release, analysts had forecast a target price of $147.8 for the company. Its new target price represents a return potential of 6.5%.

The 12-month target prices of Home Depot’s peers are as follows:

  • Lowe’s (LOW) – $81.35, with a potential return of 5.9%
  • Bed Bath & Beyond (BBBY) – $41.8, with a potential return of 1.8%
  • Williams-Sonoma (WSM) – $53.1, with a potential return of 10.2%
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Analysts’ recommendations

According to a Bloomberg survey of 32 analysts, 75% have given Home Depot “buy” recommendations, and 25% have given it “holds.” No analysts have given it “sell” recommendations. 

Home Depot’s share price tends to move in tandem with analysts’ recommendations. As analysts raise their 12-month target prices, HD stock should also rise, and vice versa.

Home Depot stock is trading lower than its target price, but this doesn’t mean it’s an automatic “buy.” Before investing, you should carefully consider the factors we’ve covered in this series.

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