Evercore ISI has boosted its stance on Home Depot (NYSE:HD), adding the home improvement giant to its Tactical Outperform list just ahead of its upcoming Q1 earnings announcement scheduled for May 20.
The firm anticipates Home Depot will maintain its full-year 2025 guidance, which includes a projected 2% drop in earnings per share to approximately $14.95—closely aligned with Wall Street expectations.
Despite a year-to-date decline of about 2%, Evercore analysts believe that reaffirming the outlook and showing signs of positive momentum could be enough to drive the stock back toward the $400 mark.
“As long as better trends into spring are confirmed, we believe the market reaction could prove similar to Walmart (NYSE:WMT) albeit with a bit more kick… a meet and keep with better trends is enough to move it back to $400+ levels last seen in January,” analysts led by Greg Melich said in a note.
Evercore’s Q1 forecast includes a slight same-store sales decline of 0.5%, a touch softer than the market’s flat estimate, and expects gross margin compression of around 30 basis points. This is primarily attributed to the recent acquisition of SRS Distribution, which the firm sees as a longer-term positive.
The analysts noted that Home Depot remains committed to investing in its core operations, with continued upgrades in technology, customer service, and new store development. These investments position the company well for gains when the housing sector eventually rebounds.
“With hopes rising for an improving Home Improvement market in 2025, we think investors would be well served by having real exposure to the turn,” the analysts wrote, noting Home Depot and Sherwin-Williams (NYSE:SHW) remain among their top five ideas.
Although high mortgage rates and sluggish existing home sales continue to weigh on short-term demand, recent data points have been more optimistic. March pending home sales climbed 6%, and home improvement sales surged 3.2% in April—marking the strongest reading since late 2022.
Evercore’s base case values Home Depot at $400, assuming a valuation premium of 30% over the broader market based on estimated 2026 earnings of $16.60 per share. Their bull case sees the stock hitting $550 with EPS reaching $20, while the bear case envisions a drop to $340 if comparable sales worsen and earnings slide to $14.