Underlying Expansionary Dynamics At Home Depot Appear Intact, Says Analyst - Home Depot (NYSE:HD)

Oppenheimer analyst Brian Nagel reiterated an Outperform rating on the shares of Home Depot Inc HD with a price target of $400.
Earlier this week, HD unnerved further already-jittery investors with somewhat softer-than-expected Q4 results and initial FY23 (Jan. 2024) guidance, the analyst said.
In Q4, sales growth within 7 of 14 product categories tracked below company averages versus a similarly calculated 3 of 14 in Q3, with management noting increased consumer price sensitivity, particularly in categories seemingly more susceptible to a broader shift in spending back to services, from goods, noted the analyst.
In the analyst’s view, against a generally still upbeat, employment-fueled spending backdrop, modestly higher mortgage rates represent a sales positive for HD and home improvement.
Now-higher lending costs are encouraging further homeowners to remain in existing properties, and undertake repair and remodeling activities within those properties, remarked the analyst.
Moderating comp sales growth at the chain lately reflects primarily post-COVID-19 ‘give back’ and should prove shorter term in duration, the analyst said.
According to the analyst, the underlying expansionary dynamics at Home Depot and within home improvement appear intact.
Also, the analyst thinks that underlying demand growth within the space is apt to persist, even as pandemic tailwinds abate, thereby helping to propel continued solid, if not outsized, sales and profit expansion at HD for the foreseeable future.
Also Read: 4 Home Depot Analysts Offer Insights On The 'Modest Disappointment' That Was Q4
Price Action: HD shares are trading lower by 0.43% at $295.04 on the last check Thursday.

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