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Why Wells Fargo Has Rated Home Depot as ‘Outperform’

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Wells Fargo’s recommendations

On April 23, Wells Fargo analyst Zachary Fadem initiated coverage of Home Depot (HD) with an “outperform” rating. He also expects the company’s stock price to reach $205 in the next 12 months, which represents a return potential of 15.4%.

Fadem stated that the recent pullback in home improvement companies was due to uncertainty surrounding global trade policy, margins, and the sustainability of improvements in recent results. However, he added that these uncertainties are being replaced by enthusiasm from rising wages, increased consumer spending, and tax reform. Also, home improvement companies’ valuation looks attractive in the retail space.

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Other analysts’ recommendations

Of the 33 analysts following Home Depot, 77.1% have recommended “buy,” and 22.9% have recommended “hold.” There were no “sell” recommendations. Analysts expect the company’s stock price to reach $212.01 in the next 12 months, which represents a return potential of 19.3%.

Home Depot stock moves in tandem with analysts’ ratings. When analysts raise their target price, the stock’s price moves up, and vice versa. However, the stock trading below analysts’ 12-month target price does not mean an automatic “buy.” Investors are advised to analyze analyst estimates, which are discussed in our next article, before making investment decisions. Peers’ stock prices and potential returns are as follows:

  • Williams-Sonoma (WSM): target price of $53.21 with a return potential of 8.3%
  • Bed Bath & Beyond (BBBY): target price of $19 with a return potential of 9.5%
  • Lowe’s (LOW): target price of $105.38 with a return potential of 24.9%

Next, we’ll look at Home Depot’s stock performance.

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