Analysts Exercise Caution on Home Depot’s Near-Term Outlook

Market experts continue to scrutinize the prospects for Home Depot's stock following a pivotal earnings report. The home improvement retailer's downward revision of its annual forecast in November has prompted a widespread reassessment of its near-term trajectory, with the core concern being its navigation of a pressured housing market and cautious consumer spending.

The consensus rating for Home Depot's equity currently stands at "Moderate Buy." However, this view is tempered by recent adjustments from major financial institutions. Oppenheimer & Co. reduced its price target to $405 from $420, maintaining a "Market Perform" rating. This move followed the company's third-quarter results, which revealed an earnings-per-share miss despite a slight revenue beat. The subsequent lowering of the full-year outlook triggered similar reactions; analysts at Goldman Sachs, Morgan Stanley, and other prominent firms also trimmed their price objectives.

This collective prudence stems from the challenging operating environment. Management attributed softer performance to a lack of storm-related damage claims, persistent consumer uncertainty, and a housing sector under strain. For the entirety of fiscal 2025, the company now anticipates a decline in adjusted earnings per share of approximately five percent.

Should investors sell immediately? Or is it worth buying Home Depot?

Strategic Moves and Investor Calendar

Amid these headwinds, the corporation is executing a long-term growth strategy centered on expanding its professional contractor segment, known as Pro. Its multi-billion dollar acquisitions of SRS Distribution and, more recently, GMS Inc., are intended to solidify its market position, even if they temporarily pressure operating margins. Additionally, Home Depot is enhancing its service offerings, exemplified by a new same-day delivery partnership launched in Canada.

Investors are looking ahead to a key event for further clarity: the Home Depot Investor and Analyst Conference scheduled for Tuesday, December 9. This presentation is expected to provide more detailed insights into the strategic roadmap and financial planning for the upcoming period. Currently, the share price is trading notably below its key 50-day and 200-day moving averages, reflecting the sustained downward pressure observed over recent months.