Accordingly, the firm upgraded Home Depot (HD) to outperform from perform and raised Lowe's Companies (LOW) price target to $300 from $235 and reiterated its outperform rating.
The brokerage is now more confident that (1) the risks of a significant setback for Home Improvement Retail have shrunk, and (2) both HD's and LOW's revenues/profits will expand near-term as the underlying demand growth within the space is likely to persist.
For fiscal years 2022 and 2023, the firm raised its EPS estimates by as much as 22% for Home Depot and nearly 30% for Lowes. And even though "daunting" year-on-year comp sales have represented a near-term risk for shares and a "challenge for investors", Oppenheimer expects that as these comps ease in the second quarter of 2022, the market will refocus more intently on the longer-term opportunities for both.
As pandemic headwinds subside "HD and LOW should emerge as even stronger players, catering to larger bases of target consumers..given sharper and more expansive merchandising, improved digital connectivity, and even stronger scale," Oppenheimer analysts Brian Nagel, Andrew Chasanoff, and William Dossett said in a note to clients on Monday.
Both company's shares were trading higher Monday, with Home Depot up more than 2% to an all-time high, and Lowe's Companies up more than 1% in the afternoon.
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
Price: 415.72, Change: +7.91, Percent Change: +1.94
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