Home Depot stock shows improving trends despite slight Q2 miss, KeyBanc notes

Investing.com - Home Depot (NYSE:HD), the $404 billion market cap retail giant, maintained its Sector Weight rating from KeyBanc on Tuesday, following second-quarter results that fell slightly below consensus expectations but demonstrated improving underlying trends. According to InvestingPro data, the stock appears overvalued at current levels, despite 8 analysts recently revising earnings estimates upward.

The home improvement retailer, generating $165 billion in revenue over the last twelve months, posted a 1.4% U.S. comparable sales increase, its strongest performance in over two years, with broad-based category strength and sequential improvement throughout the quarter, culminating in July sales growth of 3.3%.

Big-ticket comparable sales rose 2.6%, marking a significant improvement from the 0.3% increase in the first quarter and representing the third consecutive quarter of positive growth in this segment.

Home Depot management expects overall comparable sales trends to continue improving in the second half of the year, driven by greater category engagement and foreign exchange tailwinds of approximately 25 basis points at current rates, leading the company to reaffirm its 2025 guidance.

KeyBanc acknowledged Home Depot presents a compelling recovery opportunity over the next several years but suggested current valuation may limit near-term upside potential for the stock.

In other recent news, Home Depot has seen a series of positive developments following its latest earnings report. Baird raised its price target for Home Depot to $450, citing positive consumer engagement trends across product categories, while maintaining an Outperform rating. Similarly, Goldman Sachs increased its price target to $444, noting stronger top-line trends despite a slight earnings per share miss. Evercore ISI also raised its target to $450, highlighting Home Depot’s investments in professional services and technology. DA Davidson set a new price target of $475, pointing out improving demand trends and market share gains due to company-specific initiatives. Truist Securities increased its price target to $454, attributing it to the company’s broad sales growth across categories and geographies. These adjustments reflect a general optimism among analysts about Home Depot’s growth potential and market positioning.

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