Home Depot Trading Higher After Beating Estimates

Dow component Home Depot Inc. (HD) is trading higher by more than 2% in Tuesday’s pre-market after beating Q1 2021 top and bottom line estimates by healthy margins. The home improvement giant earned $3.86 per-share during the quarter, $0.93 better than estimates, while revenue rose a healthy 32.7% year-over-year to $37.5 billion, nearly $5 billion higher than consensus. Comparative sales grew 31% worldwide, with 29% growth in the United States.

Home Buying Boom

The company has benefited from intense pandemic tailwinds, with locked-down and socially-distanced customers using the crisis to engage in home improvement projects. While that catalyst is winding down at a rapid pace, COVID also triggered a major geographical shift at the same time that remote-working millennials are marrying and building their nests, underpinning a massive home building and buying spree that should last for several years, at a minimum.

Despite Home Depot’s stellar report, bullish sentiment could offer a better opportunity for rival Lowes Corp. (LOW), who reports Q1 earnings in Tuesday’s pre-market. Oppenheimer analyst Brian Negal embraced this strategy last week. noting this “more upbeat call on Lowe’s is largely tactical in nature and hinged upon prospects for a continued flow of funds into more cyclically focused equities and now historically discounted valuation versus that of Home Depot.”

Wall Street and Technical Outlook

Wall Street consensus on Home Depot now stands at an ‘Overweight’ rating based upon 21 ‘Buy’, 3 ‘Overweight’, 10 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $280 to a Street-high $377 while the stock is set to open Tuesday’s session about $24 below the median $350 target. A trip back up last week’s all-time high at $345.69 looks likely with this configuration but a breakout might not be in the cards.

Home Depot sold off from a 2020 high at 247 to a three-year low near 140 during the first quarter of 2020 and turned sharply higher, returning to the prior high in May. A June breakout stalled just below 300 in August while a March 2021 buying surge above that peak posted an all-time high last week.  A weekly Stochastic sell cycle makes a breakout unlikely in the second quarter but the long-term uptrend should eventually resume control of the ticker tape.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings to Watch Next Week: Home Depot, Walmart, Target and Deere in Focus

Earnings Calendar For The Week Of May 17

Monday (May 17)

Ticker Company EPS Forecast
DM Dominion Midstream Partners -$0.10
RYAAY Ryanair -$2.04

Tuesday (May 18)

IN THE SPOTLIGHT: HOME DEPOT, WALMART

HOME DEPOT: The largest home improvement retailer in the United States is expected to report its first-quarter earnings of $3.06 per share, which represents year-over-year growth of about 47% from $2.08 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of 21% to $34.2 billion. In the last four quarters, on average, Home Depot has beaten earnings estimates about 2%.

The Atlanta, Georgia-based company’s shares rose over 20% so far this year. Home Depot’s better-than-expected results, which will be announced on Tuesday, could help the stock hit new all-time highs. But the stock’s performance could hinge on margins.

“We expect a 25% to 30% Q1’21 comp as top-line strength likely continued through the quarter. We model gross margin down 40 bps. For context, in Q4 lumber inflation pulled gross margin down ~30 bps and likely worsened sequentially. On SG&A, assuming the per sq ft 2-year stack holds from Q4 (+24%), SG&A should lever 360 to 400 bps,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“In our model, this combination produces EPS of $3.55 to $3.85 vs consensus at $2.95. While a ’21 guide was not provided, if the ’20 top-line exit rate held through ’21, HD would expect a flat to slightly positive comp and an EBIT margin of at least 14%.”

WALMART: The Bentonville, Arkansas-based retailer is expected to report its first-quarter earnings of $1.21 per share, which represents year-over-year growth of about 47% from $1.18 per share seen in the same period a year ago.

However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline about 2% to $131.8 billion. In the last four quarters, on average, the retail giant has beaten earnings estimates about 9%.

“We raise 1Q22 EPS estimate to $1.23 from $1.22, on stronger Walmart U.S. comps, more modest SG&A deleverage, offsetting lower International segment revenues on divestitures, and remain above Street’s $1.21. We raise our Walmart U.S. comps to +0.5%, ahead of Street’s +0.3%, and our updated estimates now imply 2-year stack growth of +10.5% Y/Y, in-line with 4Q21,” noted Oliver Chen, equity analyst at Cowen.

“We expect a tailwind from stimulus, and improved apparel and other general merchandise categories, offset by grocery and other essential categories normalizing. Recall in 1Q21 Grocery improved +LDD, Health & Wellness +HSD, and General Merchandise +MSD.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 18

Ticker Company EPS Forecast
HD Home Depot $3.06
WMT Walmart $1.21
SE Spectra Energy -$0.45
NTES NetEase $6.35
BZUN Buzzi Unicem RSP $0.60
M Macy’s -$0.39
DQ Daqo New Energy $1.18
BIDU Baidu $10.63
KC Kutcho Copper -$0.16
STE Steris $1.79
TTWO Take Two Interactive Software $0.68
TCOM Trip.com Group Ltd -$2.05
JHX James Hardie Industries $0.29
TTM Tata Motors $0.47
MBT Mobile TeleSystems OJSC $19.37
AAP Advance Auto Parts $3.08
DY Dycom Industries $0.13
ASND Ascendant Resources -$2.06

Wednesday (May 19)

IN THE SPOTLIGHT: TARGET CORP

Target, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its first-quarter earnings of $2.16 per share, which represents year-over-year growth of over 266% from $0.59 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 60%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 9% to $21.51 billion.

Target’s better-than-expected results, which will be announced on May 19, would help the stock hit new all-time highs. Target shares rose over 19% so far this year.

“We raise 1Q21 EPS to $2.18E, ahead of Street’s $2.10 as we raise our comps estimate to+11.5%, and tweak margin assumptions. We now model comps +11.5%, yielding 2-year stack growth of +22.3%, accelerating sequentially by +30bps,” noted Oliver Chen, equity analyst at Cowen.

“We are ahead of Street’s+8.2% consensus estimate, and think our estimates could ultimately prove conservative as Target’s (TGT) category portfolio should see the retailer benefit from the stimulus, improving trends in apparel and other re-opening categories, along with continued strength in-home, which will more than offset normalizing food, essentials, and other category comps.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 19

Ticker Company EPS Forecast
VIPS Vipshop $2.19
JD JD.com $2.29
LOW Lowe’s Companies $2.59
CAE Cae USA $0.16
ADI Analog Devices $1.45
TGT Target $2.16
TJX TJX Companies $0.30
EXP Eagle Materials $1.23
RXN Rexnord $0.45
KEYS Keysight Technologies $1.33
CSCO Cisco Systems $0.82
LB L Brands $1.15
SNPS Synopsys $1.53
SQM Sociedad Quimica Y Minera De Chile $0.25
YY YY -$0.39
CPRT Copart $0.80
OMVJF OMV $0.97

Thursday (May 20)

Ticker Company EPS Forecast
MNRO Monro Muffler Brake $0.29
KSS Kohl’s $0.06
BRC Brady $0.65
RL Ralph Lauren -$0.75
HRL Hormel Foods $0.41
BJ BJs Wholesale Club Holdings Inc $0.56
PANW Palo Alto Networks $1.28
ROST Ross Stores $0.88
FLO Flowers Foods $0.40
AMAT Applied Materials $1.51
DECK Deckers Outdoor $0.67
TCEHY Tencent $0.54
TBLMY Tiger Brands Ltd PK $0.34

Friday (May 21)

IN THE SPOTLIGHT: DEERE & COMPANY

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal second-quarter earnings of $4.49 per share, which represents year-over-year growth of over 112% from $2.11 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 60%. The Moline, Illinois-based company would post year-over-year revenue growth of over 28% to $10.5 billion.

Deere’s better-than-expected results, which will be announced on Friday, would help the stock hit new all-time highs. Deere shares rose over 42% so far this year.

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 21

Ticker Company EPS Forecast
ROLL Rbc Bearings $1.05
DE Deere & Company $4.49
BKE Buckle $0.29
BAH Booz Allen Hamilton $0.84
VFC VF $0.28
FL Foot Locker $1.06

Home Depot Could Hit New All-Time High on Strong Q1 Earnings

Home Depot Inc, the largest home improvement retailer in the United States, is expected to report its first-quarter earnings of $2.99 per share, which represents year-over-year growth of about 44% from $2.08 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of 21% to $34.2 billion. In the last four quarters, on average, Home Depot has beaten earnings estimates about 2%.

However, the Atlanta, Georgia-based company’s shares traded about 4% lower at $328.67 on Tuesday. The stock rose over 23% so far this year. Home Depot’s better-than-expected results, which will be announced on May 18, would help the stock hit new all-time highs.

But the stock’s performance could hinge on margins.

Analyst Comments

“We expect a 25% to 30% Q1’21 comp as top-line strength likely continued through the quarter. We model gross margin down 40 bps. For context, in Q4 lumber inflation pulled gross margin down ~30 bps and likely worsened sequentially. On SG&A, assuming the per sq ft 2-year stack holds from Q4 (+24%), SG&A should lever 360 to 400 bps. In our model, this combination produces EPS of $3.55 to $3.85 vs consensus at $2.95. While a ’21 guide was not provided, if the ’20 top-line exit rate held through ’21, HD would expect a flat to slightly positive comp and an EBIT margin of at least 14%,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We believe trends have accelerated QTD relative to the ’20 exit rate, which means HD should be tracking above this framework. Flowing through the expected Q1 comp beat and adjusting other ’21 quarters for a decelerating 2-year stack (31%/25%/20%/20% with a 25% Q1 comp, 36%/27%/22%/20% with a 30% Q1 comp), our model produces a full year ’21 comp of 5% to 7.5%. This sets up HD for a strong “comp the comp” year. However, if this occurs, it could mean some revenue gets pulled forward from ’22, creating tougher compares.”

Home Depot Stock Price Forecast

Sixteen analysts who offered stock ratings for Home Depot in the last three months forecast the average price in 12 months of $341.36 with a high forecast of $375.00 and a low forecast of $310.00.

The average price target represents a 3.84% increase from the last price of $328.75. Of those 16 analysts, 14 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the base target price to $340 from $320 with a high of $420 under a bull scenario and $205 under the worst-case scenario. The firm gave an “Overweight” rating on the home improvement retailer’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $355 from $330. UBS lifted the target price to $375 from $350. Wells Fargo upped the price target to $360 from $330. Citigroup increased the price objective to $375 from $288.

Check out FX Empire’s earnings calendar

Now It’s All About Guidance; Lowe’s Shares Slump Despite Topping Estimates

Lowe’s Companies Inc, a home improvement retailer, reported better-than-expected earnings in the fourth quarter, but shares slumped over 4% as the Mooresville, North Carolina-based company reiterated the scenario guidance given at their December Analyst Day.

The home improvement retailer reported net earnings of $978 million and diluted earnings per share of $1.32 for the quarter ended January 29, 2021 compared to net earnings of $509 million and diluted EPS of $0.66 in the fourth quarter of 2019.  The fourth-quarter adjusted diluted EPS increased by 41.5% to $1.33, beating the Wall Street consensus estimates of $1.20 per share.

The company that distributes building materials and supplies through stores in the United States said its total sales for the fourth quarter were $20.3 billion compared to $16.0 billion in the fourth quarter of 2019, and comparable sales increased 28.1%.  Comparable sales for the U.S. home improvement business increased by 28.6% for the fourth quarter.

“Against very tough expectations, we think Lowe’s (LOW) results hit the bar, without clearing it by much. The comps were just about where they needed to be and the margins do look a bit better than Home Depot’s yesterday, which resulted in an EPS beat,” said Michael Baker, senior research analyst at D.A. Davidson.

“The guidance from the December analyst day was reiterated, which means forward numbers won’t change much. We continue to prefer LOW on more long-term margin potential and a lower valuation, with the offset being tougher comparisons post-pandemic due to their overexposure to outdoor and DIY relative to HD. Both of course are seeing strong momentum, including into February.”

The company reiterated its 2021 outlook that sales of between down 2% and down 7% from the “robust” through the “weak” scenarios.

Lowe’s shares, which surged 34% in 2020, slumped over 4% to $161.80 on Wednesday.

Executive Comments

“Strong execution enabled us to meet broad-based demand driven by the continued consumer focus on the home, with growth over 16% in all merchandising departments, over 19% across all U.S. regions and 121% on Lowes.com.  I would like to thank our front-line associates for their continued dedication to serving our customers and communities and supporting safety in our stores,” commented Marvin R. Ellison, Lowe’s president and CEO.

“I am pleased with our progress in 2020 as we generated nearly $90 billion in sales, with annual sales growth of over $17 billion, while also enhancing our operating efficiency.  Looking ahead to 2021, we expect to grow market share and drive further operating margin expansion.”

Lowe’s Stock Price Forecast

Fourteen analysts who offered stock ratings for Lowe’s in the last three months forecast the average price in 12 months of $197.08 with a high forecast of $212.00 and a low forecast of $170.00.

The average price target represents a 21.72% increase from the last price of $161.91. From those 14 analysts, 11 rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $210 with a high of $270 under a bull scenario and $110 under the worst-case scenario. The firm gave an “Overweight” rating on the home improvement retailer’s stock.

“Q4 fine, though flow through could have been better. Still, results check the box for what’s priced in. Achieving the ’21 robust case key for the stock,” said Simeon Gutman, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Wells Fargo raised the price target to $200 from $190. Oppenheimer upped the stock price forecast to $200 from $180.

Moreover, D.A. Davidson increased the target price to $192 from $185. Baird raised the target price to $200 from $190. At last, RBC upped the stock price forecast to $190 from $181.

Analyst Comments

“We view Lowe’s (LOW) favourably given its longer-term transformation opportunity and structural industry tailwinds, with substantial near-term uplifts from COVID-19 spending shifts that likely translate to longer-term sales retention,” Morgan Stanley’s Gutman.

“Assuming a healthy underlying housing backdrop, we think comps can accelerate longer-term from stronger sales/sq ft trends, driven by e-comm accelerating, better in-stocks, product refreshes/exclusive launches, greater traction with Pro initiatives, and removing friction from the customer shopping experience.”

Upside and Downside Risks

Risks to Upside: 1) Housing market remains strong, driving an acceleration in comps. Margin initiatives gain momentum, driving achievement of 12% EBIT margin target (9.1% in 2019) faster than expected – highlighted by Morgan Stanley.

Risks to Downside: 1) Slowing housing market & deterioration in the competitive landscape. 2) Execution missteps cause flow through to be weaker than expected. 3) Gross margin stagnation/contraction as it nears peak levels.

Check out FX Empire’s earnings calendar

U.S. Market Wrap and Forecast for Tuesday

Weak price action targeted big tech stocks on Monday, dropping Nasdaq-100 to a three-week low. SP-500 posted smaller losses while the Russell-2000 retraced Friday’s trading range, with the outperformance consistent with positive seasonality.  The WTI crude oil contract surged above 61 after Brazil’s strongman installed an army general to run Petróleo Brasileiro S.A. (PBR), one of the world’s largest oil and gas multinationals. That stock fell more than 20%.

Tesla Breaks Down

Tesla Inc. (TSLA) broke support near 780, completed a double top breakdown, and closed below the 50-day EMA for the first time since November. Dow component Apple Inc. (AAPL) fell nearly 3%, dropping into negative 2021 returns. Boeing Co. (BA) initially shook off the 777 grounding, squeezing short sellers after dropping more than 9%, but still closed in the red. Royal Caribbean Group (RCL) acted like a momentum play despite a billion dollar loss, surging to a 52-week high.

Gold had a strong session while Bitcoin faltered, lifting the yellow metal to the highest high in a week. Bonds slumped at 11-month lows while the 10-year Treasury note lifted above 1.3%, renewing anxiety about surging inflation. Kohl’s Corp. (KSS) rose over 6% as activist shareholders tried to take over the boardroom, just ahead of department store earnings that should confirm miserable conditions in America’s shopping malls.

Homebuilders on Tap

Tuesday’s Home Depot Inc. (HD) earnings will set the tone for mega-caps, with the housing boom likely to translate into a strong quarter. NVIDIA Inc. (NVDA) volatility is surging ahead of its Q4 release later this week. Bears could have the final say, given sell-the-news reactions after other chip reports in the last month. Square Inc. (SQ) could also generate fireworks after its report, with the stock glued to an all-time high after massive upside in the last 11-months

Home Depot will provide just one metric in a week chock-full of housing catalysts.  Home price data will also be released in Tuesday’s pre-market, followed by mortgage applications, January new home sales, and Lowe’s Cos. Inc. (LOW) earnings on Wednesday. Existing home sales wraps up the data flood, telling market players to keep close watch on SPDR S&P Homebuilder’s ETF (XHB), which is trading at an all-time high.

For a look at all of this week’s economic events, check out our economic calendar.

Three Top Earnings Plays This Week

Major indices sold off this week one year ago when a Kirkland, Washington nursing home reported the first non-travel related COVID cases in the United States. The rest is history, with major benchmarks crashing to multiyear lows, ahead of a relentless recovery underpinned by massive government stimulus programs. Those greenbacks continue to guide price action in 2021, with banks and recovery plays outperforming while pandemic beneficiaries falter.

The next act of this real-life soap opera comes in Monday’s pre-market, when Royal Caribbean Group (RCL) is likely to report another quarter of staggering losses.   Dow component Home Depot Inc. (HD) heads the week’s blue chip earnings schedule on Tuesday while rival Lowe’s Cos. Inc. (LOW) follows on Wednesday. Hot rocket NVIDIA Inc. (NVDA) also reports mid-week, with investors confident the stock will trade above 1,000 in coming years.

Royal Caribbean

Royal Caribbean is expected to report a Q4 2020 loss of $4.99 per-share after posting a $1.42 profit in the same quarter last year. That was also the last quarter the cruise operator made money or had a full fleet sailing around the world. RCL has gone to the capital markets several times since then, attempt to stay afloat, which takes on special meaning in this case. As with other battered leisure segments, the company is counting on vaccines to get them back in business.

Home Depot

Wall Street analysts are looking for Home Depot to earn $2.37 per share on $27.1 billion in Q4 2020 revenue. The stock cleared February 2020 resistance in May and posted an all-time high at 292.95 in August. It failed an October breakout attempt and has traded in a narrow range since that time, working off 2020’s outsized share gains. With the pandemic receding, the retailer could trade higher on a booming housing market and the strengthening U.S. economic outlook.

NVIDIA

NVIDIA is expected to report another strong quarter on Wednesday, with analysts predicting a Q4 2020 profit of $1.98 per-share on $4.82 billion in revenue. The stock just nosed above the September peak at 589.07 but a breakout will require a buy-the-news reaction after the report. That isn’t a sure thing after Advanced Micro Devices Inc. (AMD), the other beneficiary of Intel Corp. (INTC) missteps, sold off in January despite beating top and bottom line estimates.

For a look at all of this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings to Watch Next Week: Palo Alto Networks, Home Depot, Nvidia and Salesforce in Focus

Earnings Calendar For The Week Of February 22

Monday (February 22)

IN THE SPOTLIGHT: PALO ALTO NETWORKS

The Santa Clara, California-based cybersecurity company is expected to report a profit of $1.43 per share in the fiscal second quarter, which represents year-over-year growth of over 20% from $1.19 per share seen in the same quarter a year ago.

The global cybersecurity leader would post year-over-year revenue growth of over 20% to $985.681 million.

“A rapidly growing Next-Gen Security platform plus a stable core network security business remains the equation for durable 20%+ billings growth heading into the FQ2 print. More clarity into the dual growth engines should drive further multiple expansion, with our SoTP valuation yielding a $515 price target,” noted Keith Weiss, equity analyst at Morgan Stanley.

Palo Alto Networks offers a disruptive platform, well-positioned to address the evolving threat landscape. We believe Palo Alto Networks will continue to differentiate itself from its peers as it proves out a broader TAM around a NextGen Security Platform (and executing to that opportunity). With the strong billings base and the continued drive towards higher operating margins, we remain confident in the durability of our FCF estimates. Currently trading at 22x CY22e FCF vs. our model which looks for 18% FCF CAGR from CY21-26e and terminal 23x CY26e FCF, we continue to see attractive risk/reward in PANW shares.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 22

Ticker Company EPS Forecast
DPH Dechra Pharma £32.57
BNZL Bunzl £71.65
DISCB Discovery Communications Discb $0.72
DISCA Discovery Communications $0.71
GHC Graham $8.87
DISCK Discovery Communications Disck $0.72
KBR KBR $0.49
DORM Dorman Products $0.92
KFY Korn Ferry International $0.51
CTB Cooper Tire Rubber $0.92
THRM Gentherm $0.65
DISH Dish Network $0.78
BZLFY Bunzl plc $0.13
CDNS Cadence Design Systems $0.74
PANW Palo Alto Networks $1.43
SBAC SBA Communications $0.52
RSG Republic Services $0.81
WMB Williams Companies $0.30
O Realty Ome $0.35
SID Companhia Siderurgica Nacional $0.11
OKE ONEOK $0.74
IR Ingersoll Rand $0.45
EXR Extra Space Storage $0.91
TREX Trex $0.36
FIVN Five9 $0.23
NDSN Nordson $1.06
FANG Diamondback Energy $0.82
LSI LIFE STORAGE $0.54
XEC Cimarex Energy $0.68
AL Air Lease $0.75
PSB PS Business Parks $0.80
SBRA Sabra Health Care Reit $0.18
CNNE Cannae -$0.09
NHI National Health Investors $1.01
AWR American States Water $0.47
BCC Boise Cascade $0.99
HTA Healthcare Of America $0.11
RIG Transocean -$0.18
MRO Marathon Oil -$0.20
CVI CVR Energy -$0.72
GDOT Green Dot $0.18
WRI Weingarten Realty Investors $0.10
ACC American Campus Communities $0.09
OXY Occidental Petroleum -$0.58
ICAD Icade €2.33
PPERY PT Bank Mandiri Persero TBK $0.09
MGEE Mge Energy $0.51
CCU Compania Cervecerias Unidas $238.63
TPL Texas Pacific Land $4.66
SHCAY Sharp ADR $0.08
BKRKY Bank Rakyat $0.13
PKX Posco $1.52
WF Woori Bank $0.75
GPFOY Financiero Inbursa ADR $0.13
OSH Oak Street Health -$0.25
YALA Yalla $0.12
KHOLY Koc Holdings AS $0.20
DM Dominion Midstream Partners -$0.06
AU Anglogold Ashanti $1.85
CRI Carters $2.74
AVST Avast Holdings £0.12

 

Tuesday (February 23)

IN THE SPOTLIGHT: HOME DEPOT

The U.S. largest home improvement retailer is expected to report a profit of $2.61 per share in the fourth quarter, which represents year-over-year growth of over 14% from $2.28 per share seen in the same quarter a year ago. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of 3.60%.

The Cobb County, Georgia-based company’s revenue would surge more than 18% to $30.45 billion.

Home Depot has witnessed continued strong demand for home-improvement projects as customers spent more time at home during the coronavirus pandemic. The company has been gaining from the high-demand environment, driven by investments in its business. This coupled with broad-based strength across stores and geographies has been boosting comparable sales (comps) performance,” noted analysts at Zacks Equity Research.

“Amid the pandemic, customers have been blending the physical and digital elements of the shopping experience more than ever before making the company’s interconnected One Home Depot strategy the most relevant. Its interconnected retail strategy and underlying technology infrastructure have helped consistently boost web traffic in the past six months. Additionally, it has been benefiting from enhanced delivery and fulfilment options to provide a robust interconnected experience. Gains from these efforts are likely to have aided the company’s sales and earnings performance in the fiscal fourth quarter.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 23

Ticker Company EPS Forecast
UTG Unite Group £45.10
HSBA HSBC Holdings £0.01
CROX Crocs $0.82
ARNC Arconic Inc $0.35
CBRL Cracker Barrel Old Country Store $0.75
WLK Westlake Chemical $0.74
MDT Medtronic $1.15
SPR Spirit AeroSystems -$0.83
FE FirstEnergy $0.47
BCO Brinks $0.98
HD Home Depot $2.61
BNS Scotiabank $1.24
BMO Bank Of Montreal USA $1.69
CBRE CBRE Group Inc $0.94
LDOS Leidos $1.61
BLD TopBuild Corp $1.95
NXST Nexstar Broadcasting $6.99
TRI Thomson Reuters USA $0.46
M Macy’s $0.05
AWI Armstrong World Industries $0.67
RLGY Realogy $0.57
ETRN Equitrans Midstream Corp $0.34
LGIH LGI Homes $4.05
SATS EchoStar -$0.03
GMAB Genmab A/S kr7.68
XNCR Xencor -$0.38
ARNA Arena Pharmaceuticals -$1.84
EC Ecopetrol $0.22
HSBC HSBC $0.08
TX Ternium $1.02
COG Cabot Oil Gas $0.21
CBD Companhia Brasileira De Distrib $0.46
FLS Flowserve $0.53
PXD Pioneer Natural Resources $0.69
INFN Infinera $0.02
MTG MGIC Investment $0.40
XP XP Inc $1.05
SQ Square $0.24
INTU Intuit $0.99
CSGP CoStar $2.42
VRSK Verisk Analytics $1.30
PODD Insulet -$0.04
HEI Heico $0.48
MASI Masimo $0.85
EQH AXA Equitable Holdings Inc $1.21
CHE Chemed $5.13
TOL Toll Brothers $0.47
WES Western Gas Partners $0.59
HALO Halozyme Therapeutics $0.53
INSP Inspire Medical Systems Inc -$0.46
JAZZ Jazz Pharmaceuticals $4.24
Y Alleghany $5.04
RRC Range Resources $0.05
EPRT Essential Properties Realty Trust Inc $0.16
MTDR Matador Resources $0.12
CHX ChampionX Corp $0.04
MATX Matson $1.36
APLE Apple Hospitality -$0.14
ATRC AtriCure -$0.28
PEB Pebblebrook Hotel -$0.90
DAR Darling Ingredients $0.42
MRTX Mirati Therapeutics -$2.28
ALLK Allakos -$0.85
JBGS JBG SMITH Properties $0.29
IHG Intercontinental Hotels $0.94
VERX Vertex Inc. Cl A $0.07
JYSK Jyske Bank kr8.46
VIV Telefonica Brasil $0.15
CXO Concho Resources $1.18
MNTA Momenta Pharmaceuticals -$0.50
IHG Intercontinental £0.97
VJBA Vestjysk Bank kr0.08
FMS Fresenius Medical Care $0.74

 

Wednesday (February 24)

IN THE SPOTLIGHT: NVIDIA

The Santa Clara, California- based multinational technology company is expected to report a profit of $2.80 per share in the fiscal fourth quarter, which represents year-over-year growth of over 48% from $1.89 per share seen in the same quarter a year ago.

The company, which designs graphics processing units for the gaming and professional markets, as well as system on a chip unit for the mobile computing and automotive market, forecasts revenue of $4.8 billion.

NVIDIA‘s fiscal fourth-quarter performance is likely to have benefited from growth across all of its business segments except the Automotive and Professional Visualization units. NVIDIA is also anticipated to have benefited from strength in its data-centre business on the growing adoption of cloud-based solutions amid the coronavirus crisis-induced work-from-home wave. Increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds during the to-be-reported quarter,” noted analysts at Zacks Equity Research.

“Additionally, the pandemic-induced remote-working wave is likely to have bolstered sales of graphic chips utilized in desktops and laptops. This, in turn, is anticipated to have aided the quarterly performance. Nonetheless, disruptions in retail channel sales due to lockdown and social-distancing measures implemented by governments across the world to contain the spread of coronavirus might have partially offset the benefit of solid demand for the remote-working and online-learning hardware infrastructure.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 24

Ticker Company EPS Forecast
RY Royal Bank Of Canada $1.78
TCP TC Pipelines $0.99
RGEN Repligen $0.31
ENBL Enable Midstream Partners $0.11
LOW Lowe’s Companies $1.20
LIVN LivaNova PLC $0.66
HZNP Horizon Pharma $1.05
IONS Ionis Pharmaceuticals $0.26
CLH Clean Harbors $0.39
VER VEREIT $0.19
IRM Iron Mountain $0.31
WEX WEX $1.46
AVA Avista $0.79
SBGI Sinclair $5.07
ITRI Itron $0.34
SIX Swiss Exchange -$0.89
WYND Wyndham Destinations Inc $0.49
PNW Pinnacle West Capital $0.04
VRT Veritas Pharma $0.33
HFC HollyFrontier -$0.71
ODP Office Depot $0.95
TJX TJX Companies $0.61
OSTK Overstock $0.17
EXC Exelon $0.69
ETR Entergy $0.67
TRN Trinity Industries $0.15
IBP Installed Building Products $1.23
EV Eaton Vance $0.89
UTHR United Therapeutics $2.95
ORA Ormat Technologies $0.37
WTRG Essential Utilities Inc $0.45
VAC Marriottacations Worldwide $0.03
SJI South Jersey Industries $0.54
STN Stantec USA $0.33
STAA STAAR Surgical $0.08
ACAD Acadia Pharmaceuticals -$0.47
PDCE PDC Energy $0.85
APA Apache -$0.10
ANSS Ansys $2.54
PSA Public Storage $1.93
KW Kennedy Wilson $0.07
EPR EPR Properties -$0.32
UNVR Univar Solutions Inc $0.24
DDD 3D Systems $0.09
ADPT Adeptus Health -$0.29
RVLV Revolve $0.11
LB L Brands $2.90
GEF Greif $0.54
FTI FMC Technologies $0.15
ESI Itt Educational Services $0.28
MMSI Merit Medical Systems $0.43
NOVA Nova Mentis Life Science Corp -$0.36
CHDN Churchill Downs -$0.39
AGI Alamos Gold $0.13
CW Curtiss-Wright $2.33
RCII Rent-A-Center $1.00
DOOR Masonite International $1.14
RDN Radian $0.63
FNF Fidelity National Financial $1.32
AMED Amedisys $1.46
AWK American Water Works $0.80
NVDA Nvidia $2.80
NTAP NetApp $1.01
PTVE Pactiv Evergreen $0.25
UFPI Universal Forest Products $0.71
TNDM Tandem Diabetes Care $0.12
BKNG Booking Holdings Inc -$3.85
GBT BMTC Group -$0.95
PAC Grupo Aeroportuario Del Pacifico $0.67
CIB Bancolombia $0.17
PBR Petroleo Brasileiro Petrobras $0.15
GGB Gerdau $0.07
ASR Grupo Aeroportuario Del Sureste $14.83
UGP Ultrapar Participacoes $0.05
TS Tenaris $0.00
LYG Lloyds Banking $0.02
DY Dycom Industries $0.05
WB Weibo $0.72
SRPT Sarepta Therapeutics -$1.99
SSYS Stratasys -$0.10
KOF Coca Cola Femsa Sab De Cv $0.60
MIDD Middleby $1.40
CLGX CoreLogic $1.06

 

Thursday (February 25)

IN THE SPOTLIGHT: SALESFORCE.COM

The San Francisco, California-based global cloud computing company is expected to report a profit of $0.75 in the fourth quarter, which represents year-over-year growth of about 14% from $0.66 per share seen in the same quarter a year ago.

The company, which develops CRM solutions and provides business software on a subscription basis, would post revenue growth of 17% to nearly $5.7 billion.

“While Salesforce remains one of our best secularly positioned names given enterprise IT spend prioritized towards digital transformation, we see current valuation reflective of long-term share gains and achieving management’s target for $50 billion revenue in CY25,” said Keith Weiss, equity analyst at Morgan Stanley.

“At CRM‘s current scale and market cap, an increasing focus on FCF and earnings is necessary for further price appreciation, in our view. However, the recent large ($27 billion) and dilutive acquisition of Slack makes margin expansion in the near to medium term less likely. We look for greater clarity and confidence into revenue growth and margin framework at CRM in order to get more constructive.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 25

Ticker Company EPS Forecast
AMRN Amarin -$0.02
SHEN Shenandoah Telecommunications $0.85
NTLA Intellia Therapeutics Inc -$0.61
ITCI Intra Cellular Therapies -$0.86
SHOO Steven Madden $0.21
PLUG Plug Power -$0.07
AGIO Agios Pharmaceuticals -$1.31
DPZ Dominos Pizza $3.88
INSM Insmed -$0.67
MRNA Moderna Inc -$0.34
PCG PG&E $0.21
EME EMCOR $1.44
NLSN Nielsen $0.46
NRG NRG Energy $0.45
BCRX BioCryst Pharmaceuticals -$0.24
TREE LendingTree -$1.00
AES AES $0.43
DCI Donaldson $0.51
TD Toronto-Dominion Bank $1.16
WWW Wolverine World Wide $0.17
AMT American Tower $1.25
CCOI Cogent Communications $0.21
OGE OGE Energy $0.29
SRE Sempra Energy $1.58
SJM J.M. Smucker $2.17
SAFM Sanderson Farms -$0.66
ROCK Gibraltar Industries $0.63
CWT California Water Service $0.26
W Wayfair Inc. $0.82
SEAS SeaWorld Entertainment -$0.71
CNP CenterPoint Energy $0.19
PZZA Papa John’s International $0.48
STWD Starwood Property $0.49
EVOP EVO Payments Inc $0.21
DOC Physicians Realty $0.08
CLNY Colony Financial -$0.58
LI Li Auto -$0.24
NTES NetEase $2.82
PLAN Progressive Planet -$0.10
CLF Cliffs Natural Resources $0.20
EXLS ExlService $1.07
KDP Keurig Dr Pepper $0.40
PWR Quanta Services $1.00
FSS Federal Signal $0.41
FCN FTI Consulting $1.17
GIL Gildan Activewear USA $0.21
CWH Camping World Holdings $0.18
PCRX Pacira $0.81
NCLH Norwegian Cruise Line -$2.17
TFX Teleflex $3.05
FLIR FLIR Systems $0.62
VIPS Vipshop $3.13
IOVA Iovance Biotherapeutics -$0.44
IRTC iRhythm Tech -$0.29
MNST Monster Beverage $0.55
REGI Renewable Energy $0.68
XLRN Acceleron Pharma -$0.59
AAON AAON $0.29
DRNA Dicerna Pharmaceuticals -$0.08
PVG Pretium Resources $0.25
LPSN LivePerson $0.01
SWI Solarwinds $0.25
EIX Edison International $1.20
VGR Vector $0.18
BMRN BioMarin Pharmaceutical -$0.17
EOG EOG Resources $0.37
RKT Rocket Cos. Inc. $0.88
VICR Vicor $0.19
SFM Sprouts Farmers Market $0.39
ETSY ETSY Inc $0.57
PTCT PTC Therapeutics -$0.92
SEM Select Medical $0.36
EGO Eldorado Gold USA $0.33
SWN Southwestern Energy $0.14
ACHC Acadia Healthcare $0.68
UHS Universal Health Services $2.79
MTZ MasTec $1.67
ERIE Erie Indemnity $1.09
BVN Compania De Minas Buenaventura $0.22
FTCH Farfetch -$0.13
WDAY Workday $0.55
VMW VMware $2.05
HPQ HP $0.66
CRM Salesforce.com $0.75
MED Medifast $2.38
OUT Outfront Media -$0.04
PRAH PRA Health Sciences Inc $1.47
LHCG LHC $1.39
RLJ RLJ Lodging -$0.64
STOR STORE Capital Corp $0.21
ICUI ICU Medical $1.51
CUBE CubeSmart $0.20
ENDP Endo International Ordinary Shares $0.46
LYV Live Nation Entertainment -$2.25
ALTR ALTAIR ENGINEERING $0.00
AMH American Homes 4 Rent $0.06
CABO Cable One Inc $11.60
ADT ADT $0.30
RUN Sunrun Inc $0.07
CZR Caesars Entertainment -$1.94
HHC Howard Hughes -$0.70
PK Park Hotels & Resorts Inc -$0.90
FOXF Fox Factory $0.78
ADSK Autodesk $1.07
CWK Cushman & Wakefield plc $0.35
FSLR First Solar $1.25
NUVA NuVasive $0.56
ENV Envestnet $0.65
INT World Fuel Services $0.23
FIX Comfort Systems USA $0.84
NKTR Nektar Therapeutics -$0.67
BIG Big Lots $2.50
AY Atlantica Yield $0.16
PDCO Patterson Companies $0.51
KWR Quaker Chemical $1.52
AEBZY Anadolu Efes ADR $0.01
SWX Southwest Gas $1.57
AEP American Electric Power $0.78
ARRY Array Technologies Inc $0.05
ALXO Alx Oncology Holdings Inc. -$0.36
ACIW ACI Worldwide $0.49
VIST Vista Oil Gas -$0.08
BUD Anheuser-Busch $0.89
BAYRY Bayer AG PK $0.38
CM Canadian Imperial Bank Of Commerce USA $2.19
SRCL Stericycle $0.63
BBY Best Buy $3.45
ABEV Ambev $0.05
NNI Nelnet $5.78
AGO Assured Guaranty $0.57
BRFS BRF $0.08
TEF Telefonica $0.23
VALE Vale $0.91
NGLOY Anglo American ADR $0.62

 

Friday (February 26)

Ticker Company EPS Forecast
CNK Cinemark -$1.46
IEP Icahn Enterprises -$0.47
EVRG Evergy Inc $0.22
LSXMK Liberty Media SiriusXM C $0.15
PNM PNM Resources $0.15
AMCX AMC Networks $0.49
VST Victory Square Tech $0.64
BLDR Builders Firstsource $0.90
FL Foot Locker $1.29
FLR Fluor New $0.22
RHP Ryman Hospitality Properties -$1.90
STRA Strayer Education $1.48
LAMR Lamar Advertising $0.78
MGLN Magellan Health -$0.30
GRFS Grifolsbarcelona $0.22
PEG Public Service $0.65
For a look at all of today’s economic events, check out our economic calendar.

U.S. Market Wrap and Forecast for Monday

Early buying pressure faded during Friday’s expiration session, dropping major indices into the red. WTI crude oil reversed, dropping below 60 as temperatures lifted above the freezing mark in Texas and southern states. The 30-year bond posted another monthly low, continuing the relentless rise in yields across short- and long-dated instruments. Gamestop Inc. (GME) hit a monthly low, forcing another batch of Reddit traders to look for a less stressful hobby.

Roku Rocks

Roku Inc. (ROKU) posted a Q4 2020 profit of $0.49 per-share, well above expectations for a $0.03 loss, lifting the streaming hardware provider to a three-day high. However, rich valuation weighed on buying interest, stalling price well below Tuesday’s all-time high at 486.72. Deere and Co. (DE) reported the second blowout quarter in a row, lifting the agricultural giant to an all-time high above 330. The stock rose more than 55% in 2020 and has added another 20% so far in 2021.

Russell-2000 index ignored blue chip selling pressure, lifting into the midpoint of the weekly trading range. This instrument has rallied 55% since September, carving one of the strongest small cap buying waves since the 1990s. Speculative fervor in the Reddit crowd is driving the upside, with SPACs acting as petri dishes for hundreds of start-up operations. Unfortunately, most small caps won’t succeed down the road due to roadblocks set up by trillion dollar mega-techs.

Post-Options Hangover Ahead

Discovery Inc. (DISCA) could provide early metrics on the paid streaming service it launched in January in Monday’s pre-market earnings release. Home Depot Inc. (HD) and Lowes Inc. (LOW) lead next week’s blue chip calendar, highlighting do-it-yourself income during the pandemic’s second wave. The bubble in mall anchors could break after department stores release miserable quarterly results, which should confirm the slow bleed of long-term customers.

Consumer confidence and durable goods head next week’s economic calendar, along with new home sales. Millennials have entered their nesting stages, scooping up the limited supply of existing homes and driving prices to all-time highs. The supply crunch is forcing many nest builders to take advantage of remote work opportunities and build homes far away from west coast and northeast urban centers, in a phenomenon that will alter US demographics for decades.

For a look at all of today’s economic events, check out our economic calendar.

Home Depot Slips Despite Topping Wall Street Forecasts

Home Depot, Inc. (HD) shares dipped 2.54% Tuesday despite the home improvement retailer posting better-than-expected quarterly earnings amid healthy ongoing stay-at-home spending during the pandemic.

The big-box retailing giant reported a third-quarter (Q3) profit of $3.43 billion, or $3.18 per share, on revenues of $33.54 billion. Analysts had expected EPS of $3.06, with sales of $32.04 billion. Moreover, the top and bottom line grew 23- and 24%, respectively, from the year-ago quarter. During the earnings call, the company said some of its temporary employee remuneration programs implemented in the wake of the health crisis will become permanent wage increases, resulting in $1 billion of additional expenses per year.

As of Nov. 18, 2020, Home Depot stock has a market capitalization of $306.73 billion, offers a 2.15% dividend yield, and trades 27% higher year to date (YTD). However, the shares have fallen 5.28% over the last month.

Focus on Professional Business

The impressive earnings come just one day after the company announced plans to acquire HD Supply – a former maintenance, repair, and operations (MRO) business it spun off in 2007. The $8 billion deal helps position the retailer as a leader in the commercial services market.

“That is a huge opportunity for the Home Depot to continue to grow, not only on the MRO side, but as we build relationships with customers on the MRO side, we build relationships to be able to participate in capital refreshes of those facilities as well, which is something that we’re pretty focused on,” CEO Craig Menear said, per CNBC.

Wall Street View

Telsey Advisory analyst Joseph Feldman upgraded the company to ‘Outperform’ from ‘Market Perform’ and bumped his price target to $315 from $300. Feldman sees further upside from strong business trends and the company’s acquisition of HD Supply.

Elsewhere on the Street, recommendations also favor the bulls. The stock receives 18 ‘Buy’ ratings, 3 ‘Overweight’ ratings, and 11 ‘Hold’ ratings. Just one analyst recommends selling the shares. Price targets range from as high as $350 to as low as $243, with the median $310 12-month target, representing a 14% premium to Tuesday’s $272.47 close.

Technical Outlook and Trading Tactics

Home Depot shares have remained stuck in a 30-point trading range since early August as investors have questioned whether the surge in home improvement spending is sustainable beyond the pandemic. Yesterday’s weakness may lead to further short-term declines as concerns mount over rising costs.

However, active traders who favor rangebound strategies should look for buying opportunities near the range’s lower trendline, where the price finds major support around $262. Those who open a long position at that level should consider protecting capital with a stop below $260 and targeting a move to the range’s opposing side at $292.

For a look at today’s earnings schedule, check out our earnings calendar.

Few US Stocks That Could Brighten Up Your Portfolio

Markets are really quiet recently and that is why we will shift our focus towards the American Stocks, coming in right on time as Axiory have increased their product offering by introducing CFD stocks on MT4. This can significantly help you diversify your portfolio and take advantage of more trading opportunities.

Apple is testing the upper line of the symmetric triangle.

Home Depot locked in the sideways trend, waiting for a breakout.

McDonald’s defending the neckline of the H&S formation.

Netflix aiming for the lower line of the rectangle.

Pfizer with a false bullish breakout.

Prudential enjoying the buy signal after the breakout of the upper line of the triangle.

Tesla testing the lower line of the triangle.

Western Digital with a fresh buy signal coming from the breakout of a major resistance.

Micron Technology enjoying a proper buy signal after making new long-term highs.

For a look at all of today’s economic events, check out our economic calendar.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Needs to Close Over 3379.75 to Sustain Rally

September E-mini S&P 500 Index futures are expected to open higher based on the pre-market trade. Supporting the rally are bullish earnings reports from Home Depot and Walmart, which are setting an upbeat tone ahead of the cash market opening.

The benchmark futures contract hit a record high during Asian trading hours but later lost steam as caution over a Sino-U.S. spat grew after President Donald Trump announced further restrictions on tech giant Huawei Technologies Co.

At 12:07 GMT, September E-mini S&P 500 Index futures are trading 3384.25, up 4.50 or +0.13%.

Home Depot rose 2.8% in the premarket, putting it in a position to set a record high. Wal Mart shares shot higher by 5.5% in premarket trading.

In other news, retailer Kohl’s lost 25 cents per share for its latest quarter, smaller than the 83 cents a share loss that Wall Street analysts had anticipated. Auto parts retailer Advance Auto Parts earned $2.92 per share for the second quarter, well above the $1.98 a share consensus estimate.

Daily September E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the last high at 3382.50 earlier in the session.

The main trend is safe for now. It will change to down on a move through 3195.00. This is highly unlikely, but due to the prolonged move up in terms of price and time, the index remains inside the window of time for a potentially bearish closing price reversal top.

The new minor range is 3319.50 to 3388.75. Its 50% level at 3354.00 is the nearest support. Look for the short-term upside bias to continue as long as this level holds. This level is dynamic so it will move up if the market continues to make higher-highs.

The short-term range is 3195.00 to 3388.75. The minor trend will change to down on a trade through 3319.50. If it does then momentum will shift to the downside with the retracement zone at 3291.75 to 3269.00 the next likely downside target.

Daily Swing Chart Technical Forecast

Given the early price action, the direction of the September E-mini S&P 500 Index on Tuesday is likely to be determined by trader reaction to 3379.75.

Bullish Scenario

Holding above 3379.75 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to make a run at the February 20 main top at 3396.50. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 3379.75 will signal the presence of sellers. This could trigger a break into the minor 50% level at 3354.00.

A close below 3379.75 will form a closing price reversal top. If confirmed, this could trigger a 2 to 3 day correction.

For a look at all of today’s economic events, check out our economic calendar.

Home Depot Q2 Sales Jump Over 23% Amid COVID-19 Restrictions; Target $320

Home Depot Inc, the largest home improvement retailer in the United States, reported sales of $38.1 billion for the second quarter of fiscal 2020, a 23.4% increase from a year earlier as consumers ordered more home improvement products amid COVID-19 restrictions, sending its shares up about 3% in pre-market trading on Tuesday.

The home improvement retailer said its net earnings for the second quarter of fiscal 2020 were $4.3 billion, or $4.02 per diluted share, compared with net earnings of $3.5 billion, or $3.17 per diluted share, a year earlier.

For the second quarter of fiscal 2020, diluted earnings per share increased 26.8% from the same period in the prior year.

Home Depot also announced that its board of directors declared a second-quarter cash dividend of $1.50 per share.

Home Depot shares rose about 3% to $295.70 in pre-market trading on Tuesday after ending 2.7% higher at $288.24 a day before. The stock is up over 30% so far this year.

Executive comments

“The investments we have made across the business have significantly increased our agility, allowing us to respond quickly to changes while continuing to promote a safe operating environment. This enhanced our team’s ability to work cross-functionally to better serve our customers and deliver record-breaking sales in the quarter,” Craig Menear, chairman, CEO and president said in a press statement.

“We remain focused on continuing the momentum of our One Home Depot investment strategy that we believe will position us for continued growth over the long-term, while at the same time maintaining the flexibility to navigate the demands of the current environment. Through it all, we will continue to lead with our values by doing the right thing and taking care of our people.”

Home Depot stock forecast

Twenty-three analysts forecast the average price in 12 months at $283.33 with a high forecast of $320.00 and a low forecast of $221.00. The average price target represents a -1.70% decrease from the last price of $288.24. From those 23, 15 analysts rated “Buy”, eight rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley target price is $285 with a high of $380 under a bull scenario and $185 under the worst-case scenario. BofA Global Research raised price objective to $290 from $270, Oppenheimer raised target price to $320 from $274 and Credit Suisse raised it to $300 from $269.

Other equity analysts also recently updated their stock outlook. Home Depot had its price target upped by stock analysts at Raymond James to $295 from $250. The firm currently has an “outperform” rating on the home improvement retailer’s stock. Truist Securities raised their price objective on Home Depot from $300 to $240.

We think it is good to buy at the current level and target $320 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“We are Overweight HD given its best-in-class nature and structural housing tailwinds beyond N-T disruption from COVID-19. The stock seems attractively valued in the context of a potential 2H’20/2021 economic/housing recovery,” said Simeon Gutman, equity analyst at Morgan Stanley.

Upside and Downside risks

Upside: 1) Housing market relatively stable through COVID-19 headwinds. 2) Initiatives gain momentum and drive top-line acceleration in 2020-2021 – highlighted by Morgan Stanley.

Downside: 1) A slowdown in the home improvement market. 2) Greater than expected interest rate hike. 3) Departure of key leadership.

‘No Company is Entirely Immune From a COVID-19 Led Economic Slowdown’ Says Fidelity’s Simnegar

No business is completely immune from a COVID-19 led economic slowdown and the ongoing global pandemic isn’t affecting all industries and its stocks in the same way, said Sammy Simnegar, portfolio manager in the equity division at Fidelity Investments.

So far, the deadly coronavirus has infected over 14 million people in 188 countries and killed more than 600 thousand, impacting day-to-day businesses worldwide.

“We shouldn’t think of how COVID-19 is affecting the stock market in monolithic terms because the opportunities and risks are very different at the company level… we try to identify the potential ‘winners’ and ‘losers’ in a post-pandemic world,” noted Fidelity’s Simnegar.

Microsoft

Fidelity’s Simnegar thinks Microsoft is resilient. Microsoft has two main businesses – its Office software suite and its Azure cloud-services operation. Because Office and Azure help customers to be more productive and competitive, Simnegar believes spending on these products is not likely to be hurt much by an economic slowdown, Fidelity noted.

Twenty-four analysts forecast the average price of Microsoft in 12 months at $219.11 with a high forecast of $260.00 and a low forecast of $190.00. The average price target represents an 8.00% increase from the last price of $202.88. From those 24, 23 analysts rated ‘Buy’, one rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $230 with a high of $290 under a bull scenario and $150 under the worst-case scenario. We think it is good to buy at the current level and target at least $230 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Amazon

Amazon is another name Simnegar thinks could continue to take market share during this uncertain time. The company’s logistical advantages allow it to ship essential items to Amazon Prime customers with same-day shipping, Fidelity noted.

Thirty-nine analysts forecast the average price of Amazon in 12 months at $2,991.34 with a high forecast of $3,700.00 and a low forecast of $1,987.00. The average price target represents a 0.99% increase from the last price of $2,961.97. From those 39, 36 analysts rated ‘Buy’, two rated ‘Hold’ and one rated ‘Sell’.

Morgan Stanley target price is $3,450 with a high of $4,200 under a bull scenario and $2,200 under the worst-case scenario. We think it is good to buy at the current level and target at least $3,400 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Facebook and Google

Large media and entertainment holdings in the fund as of the end of May included Facebook and Google-parent company Alphabet. Simnegar thinks usage of these services has increased among many customers since they started sheltering at home due to COVID-19.

Thirty-four analysts forecast the average price of Facebook in 12 months at $257.04 with a high forecast of $300.00 and a low forecast of $185.00. The average price target represents a 6.20% increase from the last price of $242.03. From those 34, 29 analysts rated ‘Buy’, five rated ‘Hold’ and none rated ‘Sell’.

Morgan Stanley target price is $270 with a high of $325 under a bull scenario and $185 under the worst-case scenario. We also think it is good to buy at the current level and target at least $270 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity. Check this for Google stock forecast.

Others

Other top holdings included credit card companies Visa and MasterCard, as well as Home Depot. The first two continued to ride the strong secular trend toward electronic payments, while Home Depot has benefited from customers who have spent more time in their homes and, therefore, have dedicated more money toward home improvement, Fidelity noted.

Home Depot Inc (NYSE:HD) Shares Dive After It Announces Its Q1 Financial Results

According to the report, Home Depot managed to outperform analysts’ expectations as far as earnings are concerned but its sales were lower than expected. The poor sales performance has been attributed to the unfavorable spring weather which heavily affected the company’s gardening business.

“We are pleased by the strength of our business despite a slow start to the spring selling season. Outside of our seasonal business, we had solid results in all markets and categories and are seeing strong momentum in all lines of business during these first few weeks of May,” stated Home Depot CEO, Craig Menear.

Minear also acknowledged that the sales miss had a lot to do with the garden story and that the company missed the mark by a smaller margin than they had anticipated. Home Depot’s same-store sales declined by 4.2 percent which was significantly lower than the 5.2 percent anticipated decline. The firm grew by 6.5 percent excluding the garden business according to Home Depot executives, thus highlighting its massive impact.

Carol B. Tome, the Chief Financial Officer of Home Depot described the spring season as a reluctant bride. The company reported a revenue of $24.95 billion in Q1, 2018, marking a 4.4 percent increase compared to the revenue that it reported in the first quarter of the previous year. However, the figure fell short of the $25.15 billion revenue estimate by Thomson Reuters.

Home Depot’s net income in Q1, 2018 was $2.08 per share, or $2.40 billion, thus marking a noteworthy improvement compared to the net income of $1.67 per share equivalent to $2.01 billion that the company reported in Q1 of the previous year. However, customer transactions dropped by 1.3 percent during the quarter despite shoppers spending $66, 5.9 percent more than they did in Q1 of 2017. The announcement of these figures seems to have rubbed stakeholders the wrong way following the slight decline in the value of the company’s stock.

Just a week ago, analysts at research firm Jefferies lowered their estimates for the retail giant as a result of the unfavorable spring weather. The analysts also expect shoppers not to abandon their projects but rather to push them forward to the summer season. The past year has been a relatively good year for Home Depot as a result of favorable economic performance and a strong housing market.

Meanwhile, the future outlook seems positive owing to different factors, among them being the improved weather conditions which should spearhead a recovery. Home Depot has also been strengthening its e-commerce strategy. The retail firm also revealed that it has launched a 2-hour delivery program and that it expects same-store sales to surge by 5 percent.

The company also plans to change how it records revenue for its private label gift cards and credit cards. Regardless of the slow performance reported in Q1, Home Depot is optimistic about better performance for the rest of the year.