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Investing.com - UBS has reiterated a Buy rating and $475.00 price target on Home Depot (NYSE:HD) following the company’s acquisition of GMS. According to InvestingPro data, this target represents a 29% upside from current levels, with the stock currently trading at $366.64.
UBS analyst Michael Lasser noted that Home Depot’s purchase of GMS offers "several benefits, which should more than offset the risks," despite the transaction being "well anticipated given the press articles over the last few weeks."
The firm observed that Home Depot shares are now "fully absorbing the news" of the acquisition, which UBS believes has "obvious merits."
UBS highlighted that the deal provides Home Depot with "greater scale in a helpful category" and positions the company "to see even faster growth as the home improvement market recovers."
The investment firm concluded that "the merits outweigh the risks of the GMS acquisition," supporting its maintained Buy rating and price target for the home improvement retailer.
In other recent news, Home Depot’s subsidiary, SRS Distribution, has announced plans to acquire GMS Inc (NYSE:GMS). for $110 per share in a cash and debt transaction. This acquisition, valued at approximately $4.3 billion in equity and $5.5 billion in total enterprise value, is expected to expand SRS’s network significantly. Home Depot anticipates that the acquisition will be accretive to adjusted earnings per share within the first year after closing. Various analysts have weighed in on this development, with Mizuho (NYSE:MFG) maintaining an Outperform rating and a $435 price target for Home Depot, viewing the acquisition positively. Barclays (LON:BARC), on the other hand, has kept an Equalweight rating but raised its price target to $110, noting the strategic expansion for SRS Distribution. TD Cowen reiterated a Buy rating and a $470 price target, while Truist Securities also maintained a Buy rating with a $417 price target, highlighting the expansion into the professional contractor market. The acquisition aligns with Home Depot’s strategy to enhance its offerings for professional contractors and is expected to close by the end of fiscal 2025.
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