BofA sees more room for Home Depot shares

Home Depot has spent the past fewer years trying to physique a larger concern astir nonrecreational contractors, and Bank of America says that displacement could springiness the location betterment retailer a stronger setup than its peers.

Bank of America reinstated sum of Home Depot with a bargain standing and a $374 terms objective, calling the institution its preferred banal wrong the location betterment sector. The terms nonsubjective implies 19.7% upside from the $312.42 stock terms listed successful the firm’s May 5 study shared with TheStreet.

The telephone comes arsenic Home Depot continues to woody with a brushed lodging backdrop, little request for ample remodeling projects, and unit crossed respective location betterment categories. BofA inactive sees the company’s scale, Pro exposure, and caller acquisitions arsenic reasons the banal tin outperform if lodging request improves.

“We expect HD volition outgrow peers during some a benign lodging backdrop and a betterment script fixed higher Pro exposure,” BofA analysts wrote successful the report.

BofA says Home Depot has 1 cardinal borderline

Home Depot’s Pro concern is cardinal to the firm’s much affirmative view. BofA said the conception represents astir 50% of Home Depot’s income and has proved much resilient, delivering 5 consecutive quarters of affirmative comparable sales.

The steadfast said Home Depot’s comparable maturation should outperform arsenic its postulation trends clasp up amended than peers'. BofA besides said the institution should payment arsenic the manufacture moves past wide terms increases from the 2nd fractional of the year.

BofA pointed to its aggregated recognition and debit paper data, which showed housing-related services spend, a proxy for Pro demand, roseate 3.3% fiscal first-quarter-to-date. Home betterment retail spend, utilized arsenic a proxy for DIY demand, fell 0.8% implicit the aforesaid period, according to the report.

Recent deals grow Home Depot’s scope

The institution has deployed much than $24 cardinal crossed caller acquisitions, including SRS Distribution, Gypsum Management & Supply, and Mingledorff’s, according to the report.

Those deals springiness Home Depot much vulnerability to specialty commercialized contractor categories, including roofing, drywall, HVAC, landscape, and excavation distribution. BofA said the acquisitions assistance Home Depot amended code a Pro full addressable marketplace of astir $700 billion.

SRS remains the astir important of the caller deals. Home Depot completed its $18.25 cardinal acquisition of SRS successful June 2024, adding a specialty distributor with vulnerability to roofing, landscape, and excavation markets. BofA said SRS accounted for $12.7 cardinal of Home Depot’s reported different nett income successful fiscal 2025, compared with $6.4 cardinal successful fiscal 2024.