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Piper Sandler upgrades Home Depot to Overweight citing bullishness on home improvement By

© Reuters.

Piper Sandler analysts upgraded Home Depot (NYSE:) from Neutral to Overweight on Tuesday and raised the price target to $400 from $311, citing optimism about home improvement.

“We are taking a more bullish stance on home improvement – and more specifically, large remodel projects – as home equity extraction activity (cash-out refi’s + HELOC originations) is trending toward improvement in 2024.”

The firm believes HD is now well-positioned to outperform the broader market and key competitors Lowe’s (NYSE:) and Floor & Decor Holdings (NYSE:).

“After >4 years of preferring LOW shares over HD shares (during which LOW has outperformed HD by ~45%), we now think HD is set to outperform both the market and LOW.”

The strategists said that HD’s higher Pro exposure and recently introduced Pro capabilities should fuel healthy comparable sales growth amid an uptick in large remodel activity. Moreover, the company also has “a much more favorable margin set up in 2024 vis-a-vis LOW.”

Meanwhile, Piper Sandler acknowledged “notable” long-term opportunities for FND, but warned its comparable sales trends “are more dependent on Existing Home Sales.”

“We would like to see mgmt set 2024 guidance before becoming more positive on shares.”

The Wall Street firm rates LOW as Overweight and FND as Neutral, hiking their price targets to $245 and $98, respectively.