Morgan Stanley reiterated an Overweight rating and $420 price target on Home Depot (NYSE:HD) after the company's Q1 fiscal 2026 results.
The firm notes Home Depot executes well in a growthless environment. The housing backdrop remains static. Shares trade at $299.81, near the 52-week low of $296.88. The stock is down 12% YTD and 19% over the past year.
Transactions are stable at a high level, possibly impacted by weather in April. The consensus mis-modeled Q1 gross margin, making the quarter complexion in line.
Morgan Stanley sees favorable risk/reward and likes HD as a high-quality discretionary play. The stock does not price in a housing recovery, trading at a 7% discount to the S&P 500 versus its historical 10-15% premium.
Estimates have bottomed; Q1 results do not change the 2026 EPS power view. Maintenance and repair demand should drive modest growth.
In other news, HD's Q1 results met revenue and earnings expectations. Comparable sales rose 0.6% enterprise-wide and 0.4% in the U.S. EBIT margin of 12.3% beat the Street estimate of 12.1%. Truist Securities and TD Cowen reiterated Buy ratings, while Stifel maintained Hold with a lowered price target from $375 to $320.
