Home Depot (HD) stock won several bullish analyst reviews and a rating upgrade from HSBC following its modest Q4 beat, even though the company issued soft guidance as high mortgage rates continue to impact the U.S. housing market. Notably, the home improvement retailer reported positive comparable sales for Q4 FY24 after eight consecutive quarters of declines. Consequently, analysts from Goldman Sachs, Jefferies, Barclays, Wells Fargo, and Telsey Advisory reaffirmed their Buy ratings on HD stock, while HSBC upgraded the stock to Hold from Sell.
The improvement in the company’s performance came despite pressure on large remodeling projects due to macro uncertainty and the impact of high interest rates on the housing market. Meanwhile, Home Depot announced a 2.2% hike in its quarterly dividend to $2.30 per share, bringing the annual dividend to $9.20 per share. HD stock offers a dividend yield of 2.3%.
Analysts React Positively to Home Depot’s Q4 Results
HSBC analyst Daniela Bretthauer upgraded Home Depot stock to Hold from Buy and increased the price target to $410 from $356. Despite the conservative full-year outlook and lower estimates, Bretthauer noted a favorable inflection in comparable sales for the first time in two years. The analyst’s improved stance is also backed by management’s comments that HD’s business has strengthened across many categories and geographies.
Likewise, Jefferies analyst Jonathan Matuszewski reaffirmed a Buy rating on HD stock with a price target of $467. The analyst highlighted the notable rise in comparable transactions, which contributed to the EPS upside in Q4 FY24. Matuszewski contends that while the FY25 guidance slightly missed expectations, it still reflects an optimistic picture. The analyst also noted HD’s effective inventory management, a healthy sell-through rate, and the company’s capital expenditure and store opening plans that indicate future growth potential.
In reaction to the Q4 print, Goldman Sachs analyst Kate McShane maintained a Buy rating on HD stock and increased the price target to $421 from $410. McShane highlighted a notable inflection in the top line in Q4 FY24, with positive comparable sales. The analyst explained that the FY25 guidance miss was due to continued macro challenges.
Is HD a Good Stock to Buy?
Overall, analysts are acknowledging Home Depot’s solid execution despite a tough business backdrop. Wall Street has a Strong Buy consensus rating on Home Depot stock based on 10 Buys and two Hold recommendations. The average HD stock price target of $448.58 implies 14% upside potential. HD stock has advanced about 6% over the past year.
