Home Depot, Inc. (HD)’s Price Target Cut By Citi

We recently published 12 Best Consumer Cyclical Stocks to Buy According to Analysts.  The Home Depot, Inc. (NYSE:HD) is one of the best consumer cyclical stocks

The Home Depot, Inc. (NYSE:HD) is one of the largest home improvement retailers in the US. The firm operates more than 2,300 stores across the US, Canada, and Mexico.

As of November 28th, 19 out of the 37 analyst recommendations for The Home Depot, Inc. (NYSE:HD) were a Buy. Out of the remaining 18, 14 were a Hold while four were a Strong Buy. The average share price target for The Home Depot, Inc. (NYSE:HD) was 403.36.

One recent analyst coverage for The Home Depot, Inc. (NYSE:HD)’s shares came on November 21st from Citigroup. It kept the shares’ rating on Buy but reduced the share price target to $407 from $422. The shift came after the firm’s latest earnings report, which saw it cut its full-year adjusted earnings forecast to a 5% dip from an earlier 2% drop. For its fiscal third quarter, The Home Depot, Inc. (NYSE:HD) reported $41.35 billion in revenue and $3.74 in adjusted earnings per share. While the firm’s revenue beat analyst estimates of $41.10 billion, the earnings missed their estimate of $3.84.

Photo by Collov Home Design on Unsplash

Some reasons management attributed to the profit cut were lower consumer spending, weaker demand for home improvement products, and fewer storms. During the call, after UBS’ Michael Lasser asked The Home Depot, Inc. (NYSE:HD)’s management whether home improvement demand could improve without lower interest rates or an uptick in housing activity, CEO Edward Decker replied:

“We’ve talked about all the different drivers of demand in our segment. And there are leads and lags in all of them, and we’ve clearly called out over time the most statistically relevant would be home price appreciation and household formation and housing turnover. Those three right now are pressured for sure. But we also know that we’ve more than worked our way through the pull forward of the COVID years. And there are many industry reports and calculations of now under spend per household. So on one hand, we’re looking at something as much as a $50 billion cumulative under spend in normal repair and remodel activity in U.S. housing. On the other hand, we have less turnover and home price appreciation.

So that tension is going to have to balance itself out as we work through the rest of this year and into next year. But fundamentally, our job is to put great value propositions in front of the customer and take share in any environment. So can The Home Depot grow? The answer is yes. Will the industry have some shorter-term pressures with turnover in home price? Yes, as well.”

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Disclosure: None. This article is originally published at Insider Monkey.