Analyst Gets Ultra Bullish on Home Depot & Lowe’s; Take Advantage of Early Home Remodeling Cycle

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August 2, 2016 11:46am NYSE:HD NYSE:LOW

home-remodelAnalysts at Stifel Nicolaus put out a very bullish call on America’s two biggest home improvement warehouse operators, noting they believe we’re still only in the middle innings of a recovery in home remodeling projects.


Home Depot is a Buy
The firm restarted coverage on Home Depot Inc (NYSE:HD) with a Buy rating and $157 price target, suggesting a nearly 15% upside. Stifel noted that HD is well positioned to benefit from a trend toward more home remodels. The analyst also said the company’s recent investments in IT and its supply chain could further drive better margins.

Home Depot shares fell $1.17 (-0.84%) to $137.60 per share in late Tuesday morning trading. HD has gained 4.05% year-to-date, trailing the S&P 500, which has risen about 6.4% in the same period.

HD-2016-08-02

Buy Lowe’s Too?
Stifel made a similar call on Lowe’s Companies, Inc. (NYSE:LOW), resuming coverage as a Buy with a $100 target. That price target suggests a 22% upside to LOW’s Tuesday quote. While the firm believes the company is perhaps five years behind HD in terms of store buildout, LOW is still seeing accelerating margin and earnings growth. The sluggish buildout may actually be an advantage in fact, since the company has more room to grow.

Lowe’s shares fell $0.38 (-0.46%) to $81.93 in Tuesday morning trading. LOW has gained 7.6% since the start of 2016.

LOW-2016-08-02


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