Wells Fargo reiterates Buy Rating on Home Depot (HD)

Reaffirming his positive view, Wells Fargo analyst Zachary Fadem kept a Buy rating on The Home Depot Inc. (NYSE:HD) shares on May 21.

After stronger Q1 2025 results, the analyst became more confident that the company would achieve its guidance for 2025, especially after the management mentioned that the sales momentum from the last two months continued in the second quarter. Management also noted that the worst is behind regarding economic headwinds, and they do not expect broad price increases from tariffs.

The company’s better-than-expected comparable sales and growing online sales encouraged the analyst. Home Depot reported Q1 2025 sales of $39.9 billion (+9.4% year-over-year), which matched expectations, but adjusted EPS of $3.56 modestly missed consensus. Comparable sales in the quarter decreased 0.3%.

On a positive note, Home Depot reiterated its guidance of total sales growth of around 2.8% and comparable sales growth of around 1%, indicating consumer spending is still holding up well. However, consumers are deferring larger projects as interest rates remain high and prefer taking up smaller projects. The company also expects that, within a year, no country outside the United States will account for over 10% of its total purchases, thus diversifying its supply chain.

Overall, the analyst believes that Home Depot has several levers, such as pricing, inventory, and supply chain management, which should support earnings growth. As a result, he reiterated his Buy rating.

The Home Depot Inc. (NYSE:HD) is a home improvement retailer that offers a wide range of building materials, home improvement, lawn, and garden products, DIY ideas, installation, repair, and other services.

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