What Analysts Think of Home Depot and Lowe's Stocks Ahead of Earnings

Home Depot and Lowe's are set to release quarterly results, with analysts anticipating a mixed performance; Home Depot's Q1 sales are expected to increase by 8% to $39.24 billion, while Lowe's sales are projected to decline by 2% to $20.93 billion, and both are expected to post lower EPS figures. Despite a potentially slow start to 2025 due to tariff uncertainties impacting big-ticket spending, analysts remain largely bullish on both stocks, citing stable demand and potential upside later in the year if the housing market improves, though some have lowered price targets.

Analysis

Home Depot and Lowe's are approaching their quarterly earnings reports with divergent sales expectations for the first quarter: Home Depot's sales are anticipated to increase by 8% year-over-year to $39.24 billion, whereas Lowe's revenue is projected to decrease by 2% to $20.93 billion. Despite these differing sales trajectories, both home improvement retailers are expected to report a year-over-year decline in adjusted earnings per share, to $3.56 for Home Depot and $2.87 for Lowe's. Analyst sentiment remains largely bullish, with 11 out of 13 analysts tracked by Visible Alpha rating Home Depot a "buy" or equivalent and 10 out of 15 recommending a "buy" for Lowe's, supported by mean price targets suggesting approximately 15% upside ($436 for Home Depot, $270 for Lowe's from Monday's closing levels). However, this optimism is set against expectations of a slow start to 2025, with JPMorgan analysts recently trimming price targets to $410 for Home Depot and $263 for Lowe's, citing tariff-fueled uncertainty impacting bigger ticket spending. Conversely, UBS and Morgan Stanley maintain a constructive longer-term outlook, pointing to relatively stable demand and potential for improvement later in the year contingent on a housing market turnaround, with both retailers, described as "high quality bellwethers" by Morgan Stanley, expected to reiterate their full-year forecasts, albeit possibly with broader ranges to accommodate current uncertainties.

Key Decisions for Investors

• Investors should closely monitor the upcoming Q1 earnings calls for management's outlook on consumer demand, particularly for big-ticket items, and any commentary on the impact of tariffs and the housing market.
• Given the mixed signals of projected sales divergence and profit declines against a backdrop of general analyst bullishness, evaluating each company's specific performance, updated guidance, and commentary on future demand drivers will be crucial for investment decisions.
• Consider the potential for increased forecast ranges from both Home Depot and Lowe's, reflecting ongoing economic uncertainties, and assess how this aligns with individual risk tolerance and expectations for a housing market recovery later in the year.