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Investing.com -- Stifel upgraded Home Depot (NYSE:HD) shares to Buy from Hold following the company’s fiscal first-quarter 2025 results.
The firm pointed to accelerating sales momentum and renewed confidence in the retailer’s longer-term growth outlook and said it was surprised at HD shares’ modest underperformance on Tuesday.
Stifel noted Home Depot’s 0.6% drop versus a 0.4% decline in the S&P 500.
The firm highlighted that “accelerating comparable sales through F1Q25 [was] the key positive takeaway,” particularly with April U.S. comparable sales rising nearly 2.5% excluding Easter.
Stifel increased its price target on Home Depot to $425 from $405, reflecting its belief that the stock is positioned to benefit from an eventual rebound in home improvement demand.
“We view a fulsome home improvement category inflection as a ‘when not if,’” the firm said.
While Home Depot maintained its full-year guidance, Stifel believes recent trends point to upside potential.
“We believe this performance demonstrates HD’s idiosyncratic advantages, suggesting upside potential to reiterated FY25 guidance,” analysts wrote. More importantly, it is “driving our increased conviction in the revenue acceleration underpinning our FY26E-FY27E.”
Stifel now sees Home Depot’s outlook as “largely derisked from the timing,” which it says helps “shift the narrative away from trepidation around ongoing negative revisions.”
The firm concluded that Home Depot is well-positioned to outperform as demand rebounds. “We believe the FY25 performance will drive enthusiasm for HD’s ability to disproportionately capitalize on a likely above trend-line home improvement category recovery.”