Bank of America reinstated coverage of Home Depot (NYSE:HD | HD Price Prediction) stock with a Buy rating and a $374 price target on May 5, naming the home improvement giant its preferred stock in the sector. The firm expects Home Depot’s comparable sales growth to outperform the company’s peers, driven by higher Pro customer penetration and traffic trends that hold up better than competitors. For prudent investors, the call frames Home Depot stock as the share-gainer of choice in a pressured housing market.
The reinstatement landed alongside Bank of America’s Neutral view on rival Lowe’s (NYSE:LOW), signaling that the firm sees Pro mix as the decisive competitive edge in home improvement. That contrast frames the Home Depot upgrade as much about competitive positioning as valuation.
| Ticker | Company | Firm | Action | Old Rating | New Rating | Old Target | New Target |
|---|---|---|---|---|---|---|---|
| HD | Home Depot | Bank of America | Reinstated | N/A | Buy | N/A | $374 |
The Analyst’s Case
The bull thesis centers on the Pro customer: contractors, electricians, plumbers, and large-scale renovators who spend more per ticket and visit more often than DIY shoppers. Bank of America believes Home Depot’s comp growth will outperform, driven by higher Pro penetration, with traffic trends holding up better than peers.
Home Depot’s SRS Distribution acquisition deepens relationships with roofing, landscaping, and pool professionals. SRS now operates more than 1,250 locations, while the GMS Inc. deal added $5.41 billion in business acquisition payments during FY2025.
Higher visit frequency from Pros translates directly into comp outperformance for Home Depot even when transaction counts soften. In Q4 FY2025, Home Depot’s comparable average ticket rose 2% to $91.28, supporting the Pro penetration thesis.
Company Snapshot
Home Depot is the largest U.S. home improvement retailer, with a market capitalization near $311 billion and FY2025 revenue of $164.68 billion. The company posted adjusted Q4 FY2025 EPS of $2.72, topping the $2.52 consensus.
Home Depot’s board declared a $2.33 quarterly payout, marking the 156th consecutive quarter of cash dividends. The annualized rate stands at $9.32 per share.
Why the Move Matters Now
Home Depot stock closed at $312.42 on May 4, down roughly 9% year to date (YTD) and well off the 52-week high of $421.19. Shares trade at a P/E ratio of 22x with a roughly 3% dividend yield.
The macro backdrop for Home Depot remains challenging. The 10-year Treasury yield sits near 4%, keeping mortgage rates elevated, while housing starts reached 1.50M annualized in March.
That mix of share-gain potential against subdued housing activity is exactly why Bank of America prefers HD over LOW. Lowe’s missed Q4 EPS estimates at $1.98 versus $2.07 and trades at a forward P/E ratio of 18x.
What It Means for Your Portfolio
The bull case is straightforward: Home Depot gains share within a flat home improvement market, and Pro penetration delivers comp outperformance versus Lowe’s. FY2026 guidance calls for total sales growth of 3% to 5% and adjusted EPS growth of flat to 4%, modest yet achievable in a constrained environment.
The bear case for Home Depot requires patience. If rates stay higher for longer, big-ticket discretionary projects remain weak, and even share gains may not move the needle until housing turnover recovers. Investors can reference a recent analysis of top dividend stocks for 2026 for income-focused context.
Bank of America’s $374 price target reflects confidence in operational execution rather than a housing rebound bet. Prudent investors may view Home Depot stock as research-worthy for measured accumulation while the rate cycle plays out, with mortgage trajectory the key variable to monitor.
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