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Investing.com - Bernstein maintained its Market Perform rating and $398.00 price target on Home Depot (NYSE:HD) stock amid speculation about a potential acquisition of GMS.
The Wall Street Journal reported on June 19 that Home Depot submitted an undisclosed bid for GMS, following an unsolicited $5 billion cash offer ($95.2 per share) from QXO. Home Depot has declined to comment on the reported bid.
Bernstein analyst Zhihan Ma noted that a $5 billion acquisition of GMS would have limited near-term financial impact on Home Depot, as the valuation is approximately 80 times smaller than Home Depot’s enterprise value.
The potential acquisition could delay the resumption of Home Depot’s share buybacks by another year to fiscal year 2028, based on a leverage target of approximately 2.0x adjusted debt to EBITDAR.
Bernstein views the possible bidding war as a signal of Home Depot’s commitment to its complex Pro strategy, potentially pitting the company’s penetration of the Complex Pro total addressable market against QXO’s efforts to consolidate independent building materials distributors.
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