Home Depot stock gains on analysts raising price targets

• Home Depot stock gained 1.6% on Wednesday after analysts were positive on Q3 results.
• HD stock slid more than 1% lower on Tuesday as CEO blamed high interest rates for poor comparable sales.
• Comparable sales fell 1.3% YoY in the third quarter.
• Most analysts raised their price targets on Wednesday for HD.

Aided by analyst loyalty, The Home Depot (HD) is gaining ground one day after the remodeling retailer sold off following third-quarter results showing dwindling comparable sales. HD stock has risen 1.6% on Wednesday to trade north of $409.

The Dow Jones Industrial Average (DJIA), of which Home Depot is a member, has gained 0.4% near lunchtime, while the growth-conscious NASDAQ decreases slightly.

Home Depot stock news

The top and bottom line were decent on Tuesday for the home-improvement boxstore. Home Depot earned $3.78 in adjusted earnings per share (EPS) on $40.2 billion in revenue. That turned out to be 13 cents ahead of Wall Street’s consensus profit estimate and almost a billion dollars above the sales expectation.

Revenue rose more than 6% from a year prior, but comparable sales fell 1.3% globally and 1.2% in the US.

The negativity in the stock price on Tuesday followed comments from CEO Ted Decker, who thinks that his company will do much better once interest rates climb down from their perch. 

"We’ll have to work our way through this current macro uncertainty and the interest rates pressuring home improvement demand," Deck stated on the earnings call. "But this is a market, after all, and markets return to equilibrium, and remodeling will as well. We just don’t think we’re quite there yet."

Evercore ISI analyst Greg Melich was not as pessimistic. He agreed with Decker that the economy will determine how Home Depot performs in 2025 but pointed to transaction data that gave him hope.

Customer transactions declined 0.2% YoY to 399 million in the third quarter. The average ticket fell 0.8% from a year ago to $88.65, and sales per retail square foot softened by 2.1%.

However, the -1.2% US comparable sales figure was expected to be -3.3%, so there was some good news.

Mizuho raised its price target on HD stock from $435 to $440. Evercore ISI raised from $420 to $430, while Bank of America Securities raised from $425 to $450.

Home Depot stock chart

Home Depot retains support nearby at $396, which served as a point of consolidation recently and then is also near where the 50-day Simple Moving Average (SMA) is gliding. Resistance going back to late 2021 and again earlier this year sits at $420, so that is where all bulls will look to see a break to the upside.

HD daily stock chart