Home Depot’s (HD) shares traded flat early Wednesday even as analysts unleashed a barrage of price-target cuts on the home improvement retailer despite surpassing their expectations for its first-quarter earnings.
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Home Depot Tops Expectations in Q1
During the three-month period that ended on May 3, Home Depot expanded its sales by 4.8% to $41.8 billion, beating the Wall Street consensus of $41.64 billion. In addition, the retailer’s adjusted earnings per share of $3.43 came in ahead of analysts’ estimates of $3.41, despite dropping roughly 4% from a year ago.
The sales growth came even as demand for home improvement products remained fragile and erratic — a trend that has sent HD stock down about 12% since the start of the year.
Moreover, Home Depot’s comparable sales during the quarter — or sales from stores that have been opened for at least a year — rose by 0.6%. This is despite the impact of the low single-digit decline in same-store sales from its roofing-related products and repair services.
Costs Drag on Home Depot’s Profits
On the downside, costs impacted the retailer’s profitability. Its gross profit margin dropped by 75 basis points year-over-year, while operating margin fell from 12.9% to 11.9%.
Looking ahead, Home Depot maintained its earlier fiscal 2026 guidance and still expects total sales growth of about 2.5% to 4.2%. The retailer also sees comparable sales for the full fiscal year coming in between flat and up by 2%.
Home Depot Hit by Analyst Blowback
In response to the results, analysts adjusted their HD ratings as follows:
- Wells Fargo analyst Zachary Fadem maintained his Buy rating but trimmed his price target from $375 to $360, implying about 19% upside. He noted that the results matched expectations, but bad weather in April tempered sales.
- Baird analyst Peter Benedict kept his Buy rating but lowered his price target from $430 to $380, implying about 26% upside. Benedict urged investors to be patient.
- DA Davidson’s Michael Baker stuck with his Buy rating but slashed his price target from $445 to $377, suggesting about 25% upside. Baker believes the recent hike in interest rates will delay when expected general improvement in the U.S. economy would manifest.
- Wolfe Research’s Spencer Hanus also called HD a Buy but cut his price target from $416 to $365, indicating about 21% upside. However, Hanus noted that the Q1 2026 results were better than feared and the worst was avoided.
Is Home Depot a Good Stock to Buy?
Across Wall Street, Home Depot’s shares continue to boast a Strong Buy consensus rating from analysts. This is based on 19 Buys and five Holds issued over the last three months.
In addition, the average HD price target of $384.67 indicates about 27% upside from current trading levels.
