Home Depot (HD), the well-loved home improvement chain, got its price-target cut by Piper Sandler. This change comes amid worries that the negative mood of high-income earners is beginning to weigh on their purchases of expensive remodeling jobs. In light of this, CEO Ted Decker expressed continued confidence in the results, pointing to HD’s unique positioning to withstand economic shocks, including tariffs. The company’s stock is down 7% year to date and gained 3% on Monday. According to Barclays analysts, that leaves Home Depot well-positioned as the calendar flips to April. They prefer Home Depot to Lowe’s for its greater commitment to professional services and big-ticket remodeling costs.
Piper Sandler analysts have reduced Home Depot's price target from $435 to $418 per share, citing "near-term pressure from big-ticket weakness and tariffs." Decker remains unfazed by such pessimism and is confident in Home Depot's ability to "manage through" tariffs and emerge stronger.
"We've had tariffs forever," said Home Depot CEO Ted Decker.
The CNBC Investing Club has taken advantage of Home Depot's recent stock weakness, adding shares to its portfolio several times in March. This move highlights the club's confidence in the long-term prospects of Home Depot, which has consistently been one of Jim Cramer's favorites.
Piper analysts further believe that the long-term environment for these large-ticket renovation projects remains solid, including some encouraging indicators trending towards 2025. Home Depot reaps rewards from its newfound stronger ties to pro and big-ticket remodel spending. This level of extensive, high-visibility exposure has created an important competitive advantage for its closest competitors.
"Underlying improving health in housing and remodel trends keeps us positive on the longer-term set-up — particularly if mortgage rates continue to fall," stated Piper analysts.
This isn’t the first time Decker has alluded to rising interest rates. He’s said that lowering mortgage rates would be the best antidote to the housing downturn. This sentiment seems to align perfectly with the company’s strategic positioning. After all, as homes appreciate, they require more maintenance and remodeling work done on them—which is exactly in the smart company’s sweet spot.
"So, the amount of work and upkeep you need to make on those houses, they've gained in value, but they need a lot of work. And we're the place to go to help people do that," added Decker.
Home Depot’s seasonal Mattress Retailer Survey produced further confirmation of weakening mattress sales last month. If all this wasn’t bad enough, there are signs that this weakness has persisted into March. Though these results are admittedly disappointing in the near term, Piper analysts say they’re still optimistic about the company’s future.
Jim Cramer also expressed confidence in Home Depot's future success.
"I think that everything is set up for this to be a huge stock in 2025," he remarked.