By Senad Karaahmetovic
Cowen analysts initiated research coverage on Home Depot (NYSE:HD) with an Outperform rating and a $350 per share price target.
The analysts are positive about HD’s opportunity to increase market share, as well as its sales productivity. Moreover, they see an opportunity for Home Depot to accelerate the flywheel and expand its EBIT margin.
“We think HD is in the early innings of harvesting gains following an investment cycle, and anticipate ongoing share growth, notwithstanding the macro environment. HD has done a good job of growing significant share with smaller Pros, and we are encouraged by green shoots with the large Pro planned purchase. We estimate HD can take its overall share from 16.8% in FY21 (based on Cowen's ~$900bn TAM) to 17.2%, or +50bps, by FY25,” the analysts said in a client note.
Overall, HD is described as “a best-in-class operator.” Unlike Home Depot, Cowen initiated research coverage on Lowe’s (NYSE:LOW) at Market Perform with a $210 per share price target.
“Mgmt has done a good job of strengthening fundamentals, including Pro, stores, supply chain, & products, and we are constructive on the oppty ahead. In-turn, we expect ongoing productivity & EBIT margin expansion. That said, greater exposure to DIY in a slowing backdrop, large productivity gap to HD, & valuation keep us on the sideline,” the analysts explained in a separate note.