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Home Depot's Price Target From Morgan Stanley Raised to $340 From $320 Ahead of Q1 Report, Overweight Rating Maintained

05/11/2021 05:01

08:47 AM EDT, 05/11/2021 (MT Newswires) -- Home Depot (HD) received a boost to its price target from Morgan Stanley on Tuesday, a week ahead of the home improvement retailer's Q1 report, which the firm is predicting will show expanding margins.

Morgan Stanley's new price target on Home Depot's stock is $340 per share, up from $320. However, the boosted target is slightly below the stock's Monday closing price of $341.12 even as Morgan Stanley has an overweight investment rating on the stock.

Home Depot's Q1 report next week comes at a time when the home improvement sector has been benefiting from strong housing demand during the COVID-19 pandemic.

Morgan Stanley sees Q1 as "a critical quarter" for COVID-19 beneficiaries including Home Depot "with demanding-ish multiples." It added: "For HD, it's all about margins and flow through, of which we predict expansion."

The firm said Home Depot's "current top line strength is well understood and appears appropriately reflected in the stock, which is up 28% year to date." However, it added, "there is more uncertainty over margins, where we believe a bullish outcome... is increasingly being discounted."

Home Depot's Q1 results "could help establish how HD will manage margin puts and takes (lumber inflation, lapping COVID costs, reinvestments in wages/price, One HD) and the extent to which sales upside flows through," Morgan Stanley said.

On average, analysts have an outperform investment rating on Home Depot's shares, with price targets ranging from $216 to $375.

(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: 339.50, Change: -1.94, Percent Change: -0.57