Home Depot and Lowe's Upgraded by Stifel Analyst
Following a strong month for retail sales, John Baugh an analyst at Stifel Financial Corp. is giving bullish ratings to both The Home Depot, Inc. (NYSE: HD) and Lowe's Companies, Inc. (NYSE: LOW)
With reiterating buy ratings on both stocks, Baugh now has elevated his price target on Lowe's to $156 from $149 and Home Depot to $276 from $260. In justifying the ratings, he said home improvement spending soared 16.4% year-over-year in April with the adjusted figure rising 5.2% in the quarter ending April.
The news comes as the Commerce Department reported Tuesday that retail sales surged to a record of 17.7% in May. In the first quarter, Home Depot and Lowes' sales rose 6% and 11% respectively, with the growing trend likely to continue, as noted by Baugh.
He is also raising his second-quarter same-store sales growth, projecting Home Depot to surge 7% and Lowes to soar 9%, up from his original estimates of 6% and 7% respectively.
After the optimism by Baugh, shares of Lowe's and Home Depot gained 3% and 1% by midday Wednesday. This year has been kind to Lowe's and Home Depot, as their stocks are up 13% and 15%respectively year-to-date, respectively.
Wednesday so far has seen U.S. benchmarks trade up and down within a limited range as investors are on pause following the new Covid-19 cases in China and several states reporting record numbers of infections. But by midday the benchmarks were in the green, as the Dow Jones gained 45 points, the S&P 500 added 12 and the Nasdaq Composite was up nearly 1% at 9,983.14 points.
As the U.S. endures a growing number of cases in hot spot states, expect home improvement stocks to post positive performances for the rest of an otherwise unpredictable year.
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