UPDATE: Cowen Starts Home Depot (HD) at Outperform

Cowen analyst Max Rakhlenko initiates coverage on Home Depot (NYSE: HD) with a Outperform rating and a price target of $350.00.

The analyst comments "HD is well positioned to harvest benefits following its investment cycle, which should enhance productivity and drive EBIT margin expansion. We model EBIT margin will reach 15.9% by FY25, improving +65bps from FY21. In our view, this is underappreciated as the Street models HD’s EBIT margin at 15.4% in FY25, implying no expansion from FY22 guide. We expect growth will be driven by ongoing SG&A leverage on more efficient store and supply chain utilization. We also anticipate modest gross margin reversion following annual declines since FY18, despite likely gaining share in lower margin Pro categories and shifting supply chain costs. That said, our 33.9% FY25 estimate remains below pre-pandemic levels."

For an analyst ratings summary and ratings history on Home Depot click here. For more ratings news on Home Depot click here.

Shares of Home Depot closed at $285.06 yesterday.

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