Home Depot (HD) Stock Forecast & Price Target

Home Depot has consistently outperformed Lowe's in terms of sales and earnings growth, which has historically justified a premium valuation compared to its primary competitor. The company is benefiting from a robust housing market, as home prices have risen for 19 consecutive months and are approximately 50% higher than pre-pandemic levels, which bodes well for home improvement spending. Furthermore, the forecast for 2025 indicates a flat to slightly positive growth in the home improvement retail industry, with recent trends showing an improvement in comparable sales and transaction metrics, particularly driven by hurricane-related sales and a strong holiday season performance.

Home Depot's adjusted EBIT margin guidance for 2025 has been lowered to 13.4%, approximately 40 basis points under initial expectations, primarily due to sales deleverage and a negative mix shift stemming from the SRS partnership. Gross margins have also experienced a decline of 25 basis points year-over-year, attributed to falling lumber prices and decreased housing demand. The company's projected adjusted diluted EPS is expected to decrease by around 2%, indicating a challenging outlook driven by a higher-than-anticipated tax rate and external macroeconomic pressures such as interest rate increases affecting home affordability.