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Analysts Favor ‘Buy’ Rating ahead of Home Depot’s Q4 Earnings

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Analysts’ recommendations

Of the 33 analysts that cover Home Depot (HD), 72.7% are favoring a “buy,” and 27.3% are favoring a “hold.” None of the analysts are favoring “sell” recommendations. On average, analysts have set a 12-month price target of $203.07, which represents a return potential of 5.9% from its February 20 closing price of $191.85.

Since the beginning of 2019, UBS and J.P. Morgan have lowered their price targets, while RBC has raised its price target for Home Depot. On January 17, J.P. Morgan cut its price target from $208 to $203, while UBS lowered its price target from $220 to $200 on January 4. RBC increased its price target from $191 to $196 on January 9.

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Peer comparisons

Of the 31 analysts that follow Lowe’s Companies (LOW) stock, 71% have given it “buys,” and 29% have given it “holds.” On average, analysts have set a 12-month price target of $111.0 on the stock, which represents a potential return of 5.1% from its price of $105.66.

Of the 23 analysts that follow Williams-Sonoma (WSM), 4.3% have given it “buys,” 73.9% have given it “holds,” and 21.7% have given it “sells.” On average, analysts have set a 12-month price target of $54.69 on the stock, which represents a fall of 3.1% from its stock price of $56.43.

Of the 21 analysts covering Bed Bath & Beyond (BBBY), 57.1% recommend a “hold,” and 42.9% recommend a “sell.” Their average 12-month price target of $13.00 implies a 23.0% downside from the stock’s current price of $16.89.

Valuation multiple

The increase in Home Depot’s stock price has also raised its valuation multiple. As of February 20, Home Depot was trading at a forward PE multiple of 18.7x compared to 17.8x before the announcement of its third-quarter earnings. On the same day, peers Lowe’s, Williams-Sonoma, and Bed Bath & Beyond were trading at a forward PE multiple of 17.5x, 12.7x, and 9.5x, respectively.

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