The transition to the postpandemic era might not be as bad as feared for
Home Depot and
Lowe’s, two companies that benefited as Covid-19 led to a surge in home buying and renovations.
“We are now more confident that a) risks of a significant, transitional-type setback, for Home Improvement Retail and/ or its leading players, have diminished, and b) underlying demand growth within the space is apt to persist,” wrote Brian Nagel, lead analyst on an
Oppenheimer research report on the stocks.
The firm upgraded
Home Depot stock (ticker: HD) to Outperform from Perform and set a target of $470 for the price. It raised its target for
Lowe’s, also rated Outperform, to $300 from $235.
In early afternoon,
Home Depot stock was up 1.8% to $415.28. while Lowe’s gained 1% to $251.28. The
had gained 1.4%.
The report, published Monday morning, said the outlook for both firms remains strong even given prospects for a return to more normal, postpandemic behavior by consumers in 2022. The housing market remains strong and the limited supply of properties for sale is encouraging homeowners to remodel their existing homes, it said.
Lowe’s remains the top pick for Oppenheimer. “Within home improvement retail, we continue to look most favorably upon prospects for LOW, owing to still significant “self-help” opportunities at the company and a historically discounted relative share valuation,” Nagel wrote.
Early Monday afternoon, shares of Home Depot were up 56% year to date, while shares of Lowe’s had gained about 57%.
Write to Logan Moore at [email protected]