Bank of America Securities analyst Robert Ohmes has reiterated their bullish stance on HD stock, giving a Buy rating on March 28.
Robert Ohmes has given his Buy rating due to a combination of factors pertaining to Home Depot’s strategic moves and growth prospects. The significant decision to acquire SRS Distribution for $18.25 billion, the largest acquisition in Home Depot’s history, is a key driver of this rating. SRS Distribution’s status as a leading distributor with about $10 billion in 2023 sales and substantial EBITDA margins enhances Home Depot’s market position. This acquisition, expected to close by the end of 2024, is set to provide Home Depot with increased capabilities to serve professional customers in specialized trades, thus likely accelerating the company’s growth and expanding its share of wallet with these high-value customers.
Furthermore, the acquisition is anticipated to be accretive on a cash EPS basis, excluding synergies, despite a temporary pause in share repurchases through 2024 due to the financing of this deal. Although this pause has led to a slight adjustment in the EPS estimate for 2024, the overall expectation is for the acquisition to boost Home Depot’s earnings in the long term. Additionally, Ohmes highlights the acquisition’s potential to further differentiate Home Depot from its competitor Lowe’s, especially in the professional segment where Home Depot already has a higher penetration. Taking into account these factors, along with the expanded market opportunities in the professional space and upwardly revised EPS estimates, Ohmes raises the price objective to $425, maintaining a bullish outlook on Home Depot’s stock.
In another report released on March 28, Robert W. Baird also maintained a Buy rating on the stock with a $390.00 price target.
Based on the recent corporate insider activity of 76 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HD in relation to earlier this year.
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Home Depot (HD) Company Description:
Home Depot, Inc. is a home improvement retailer, which sells building materials, home decor, flooring, appliances, lawn and garden products, tools and other merchandise. It also offers installation services as well as tool and equipment rental. The company was founded by Bernard Marcus, Arthur M. Blank, Kenneth Gerald Langone and Pat Farrah on June 29, 1978 and is headquartered at Atlanta, GA.
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