Stifel raised Home Depot’s price target, but warned expectations for valuation already appear high.

  • Stifel raised Home Depot’s price target to $340 but kept a Hold rating.
  • The firm said Home Depot’s premium valuation requires a meaningful housing and home-improvement recovery to support further upside.
  • RBC Capital raised Home Depot’s target to $343, citing supply-chain investments and a strong store network. 

Home Depot (HD) stock gained overnight as investors positioned ahead of earnings, with the retailer set to report second-quarter (Q2) results before Tuesday’s market open. Stifel raised its price target, citing the company’s relative strength but flagged the need for a broader home-improvement recovery. 

Stifel Lifts Home Depot Price Target

Stifel raised Home Depot’s price target to $340 from $320 while maintaining a ‘Hold’ recommendation, signaling confidence in the retailer’s relative position, but Stifel still sees reasons for investors to remain cautious.

Stifel said Home Depot trades at a premium to rival Lowe’s Companies Inc. (LOW), reflecting what analysts view as stronger operating positioning and additional opportunities tied to professional customers. The company’s Pro business serves contractors and other industry customers, making it an important part of the longer-term investment case.

Home Depot trades at a price-to-earnings (P/E) multiple of 24, while Lowe’s is at a multiple of 18.2, according to Koyfin data. 

Stifel believes Home Depot may need a substantial improvement in the broader home-improvement market before investors become comfortable assigning the stock a higher valuation multiple. A stronger housing and renovation environment could provide the catalyst needed to support further upside.

Home Depot stock edged 0.6% higher overnight, ahead of Tuesday. 

RBC Sees HD’s Recovery Expectations Priced In

Last week, RBC Capital also lifted its price target on HD to $343 from $340 while retaining a ‘Sector Perform’ rating. The firm highlighted Home Depot’s investments in its distribution network and its valuable store footprint as advantages that could help the retailer capture additional markeshare.

RBC added that Home Depot’s physical presence and efforts to improve its supply chain could allow the company to compete more effectively as smaller or less-efficient players exit or lose ground.

However, the firm cautioned that investors may already be pricing in a relatively quick rebound in housing activity. That leaves less room for disappointment if the recovery develops more slowly than the market currently anticipates.

According to Fiscal Ai data, analysts see Home Depot posting $47.23 billion in Q2 revenue with earnings of $4.73 per share. 

HD Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory. The stock saw an 840% surge in message volume over the past week with a 0.3% gain in watchers. 

A user said, “Much of this earnings comes down to whether or not the Pro segment is making up for the drop in housing renovation projects.”

HD stock has dropped nearly 2% year-to-date. 

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