Oppenheimer Raises Home Depot (HD) PT to $150

Oppenheimer analyst, Brian Nagel, raised his PT on Home Depot (NYSE: HD) to $150 rather than downgrading the stock after the company exceeded his $122 PT. The new 12-18 month price target of $150 is predicated on 22x FY17 (Jan. 2018) EPS forecast of $6.80 and suggests upside of more than 15% from current levels.

For Q4, reported Feb. 23rd, US comps at HD rose an above-plan 8.9%, fueling EPS expansion of +17% in the period. Unseasonably warm weather helped sales somewhat in Q4, but overall we view continued sales strength as an indication that HD is successfully catering to consumers looking to spend on their homes.

For FY17 (Jan. 2018), he expects operating margins to climb to 14.6% from 13.4% in FY15 (Jan. 2016) vs. a prior annual peak of 11.5% in FY05 (Jan. 2006). HD management indicated at an analysts event in Dec. that it expects operating margins at the chain to reach 14.5% in FY18 (Jan. 2019).

Recent Data Suggest Ongoing Strength in US Housing Market. In Jan., Existing Home Sales and Housing Permits rose by year-on-year rates of +11% and +13.5%. Housing units under construction in Jan. improved to their highest level since May 2008. As they indicate in recent sector reports, they view home improvement spending as an overall bright spot in an otherwise mixed consumer backdrop.

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 $128.84 yesterday.

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