BofA favors Home Depot, sets $374 target

Home-improvement retail is having a weird cycle. People still need roofs, pipes, flooring, and repairs, but the classic move-up housing market is still sluggish. That matters because fewer home sales usually mean fewer big remodeling projects. Bank of America’s call this week basically says one chain is built a little better for that backdrop: Home Depot. On May 5, the firm reinstated coverage with a Buy on Home Depot and a Neutral on Lowe’s, and put a $374 target on Home Depot. (finance.yahoo.com) ### Why does a housing slowdown hit these stores? Home improvement is tied to housing turnover more than people realize. When people buy, sell, or refinance homes, they spend on paint, appliances, flooring, kitchens, and all the annoying fix-ups that suddenly feel urgent. But elevated mortgage rates have kept affo(finance.yahoo.com)s the macro problem sitting over the whole sector right now. (ir.homedepot.com) ### So why did BofA lean toward Home Depot? The short version is Pro exposure. “Pro” means professional customers — contractors, roofers, remodelers, landscapers, maintenance crews. Those buyers are not immune to a slowdown, but they are usually steadier than the weekend DIY shopper. Bank of America’s view is that Home Depot h(ir.homedepot.com)eers if housing stays soft. (finance.yahoo.com) ### What changed at Home Depot? Home Depot has spent years trying to become more useful to pros, not just more familiar to homeowners. The biggest move was the SRS Distribution deal, which closed in June 2024 for about $18.25 billion. SRS sells into specialty trade channels like roofing, landscaping, and pool cont(finance.yahoo.com)n a Saturday. Home Depot said the acquisition expanded its addressable market by about $50 billion, to roughly $1 trillion. (ir.homedepot.com) ### Why does that matter more now? Because this is a “boring jobs still happen” market. If people are delaying dream kitchens, they still need storm damage fixed, roofs replaced, pools serviced, and maintenance done. Pro demand tends to be less mood-driven than DIY demand. That does not make Home Depot recession-proof, but it does make the revenu(ir.homedepot.com)he heart of the analyst call. (finance.yahoo.com) ### What about Lowe’s? This is not a disaster story for Lowe’s. Lowe’s also said it delivered positive comparable sales in Pro in fiscal 2025, and it has been pushing harder with its Pro loyalty program, delivery, and “extended aisle” assortment. It posted fiscal 2025 sales of $86.3 billion with 0.2% comp growth. (finance.yahoo.com) market. (corporate.lowes.com) ### Is Home Depot actually executing? The recent numbers say yes — at least well enough to keep the thesis alive. Home Depot’s fiscal 2025 sales rose 3.2% to $164.7 billion, and comparable sales edged up 0.3%, with U.S. comps up 0.5%. That is not explosive growth. But in a rate-pressured environment, even slight positive(corporate.lowes.com)distribution. (ir.homedepot.com) ### What is the catch? The catch is that Pro strength can cushion the cycle, not erase it. If rates stay high for longer, turnover stays weak, and consumers keep deferring larger projects, both chains still face a demand ceiling. A price target is basically a bet that Home Depot’s mix, scale, and Pro investments will matter more than that ceiling. But the ceiling is still there. (finance.yahoo.com) ### Bottom line? This call is really a vote on customer mix. In a soft housing market, Bank of America thinks the retailer tied more tightly to working contractors — not just DIY shoppers — has the better setup. Right now, that points to Home Depot.