A company’s stock price moves in tandem with analysts’ ratings. When a company increases its target price, the stock price moves up and vice versa.
Of the four companies, Home Depot (HD) appears to be the most favored stock among analysts. No analysts recommended a “sell.” Of the 31 analysts that follow Home Depot, 74.2% recommended a “buy” and 25.8% recommended a “hold.” On August 16, 2017, after Home Depot announced its 2Q17 earnings, Raymond James raised its rating from “market perform” to “market outperform.” Raymond James maintained its target price of $165.
Of the 30 analysts that follow Lowe’s (LOW), 53.3% recommended a “buy,” 43.3% recommended a “hold,” and 3.3% recommended a “sell.” After its 2Q17 earnings, many analysts lowered their 12-month target price. As of September 26, 2017, analysts expect Lowe’s stock price to reach $84.0 in the next 12 months, which represents a return potential of 6.0%.
Peers’ target price and return potential are as follows:
- Bed Bath & Beyond (BBBY) – target price of $24.58 with a return potential of 7.1%
- Williams-Sonoma (WSM) – target price of $50.16 with a return potential of 0.3%
If the current stock price is lower than analysts’ target price, it doesn’t mean an automatic “buy.” Investors should carefully examine the various parameters that we discussed in this series before making any investment decisions.