Shares of Home Depot Inc. fell. and Lowe's Cos. in premarket trading Monday after Oppenheimer downgraded the building materials and appliance giants to outperform and lowered their price targets.
Upcoming 2024 guidance from Home Depot and Lowe's “may be unfavorable catalysts for stocks.”
Home Depot is scheduled to report fourth-quarter results on February 20, followed by Lowe's results on February 28.
home Depot Inventory HD,
It fell by 0.9%, while Lowe's fell,
It decreased by about 0.7%.
Oppenheimer analyst Brian Nagel cut his price target for Home Depot to $345 per share from $360, and lowered his target for Lowe's to $230 from $275.
“We assume a more cautious near-term stance toward home improvement retail,” Nagel said in a research note. “We are concerned that the short-term market sentiment towards HD and LOW is turning too complacent and that stocks may not cut sufficiently due to potential ongoing fundamental weakness in the chains.”
Oppenheimer's Nagel remains optimistic about the sector's long-term outlook because “the structural foundations of home improvement retail remain sound.”
Analysts said upcoming 2024 guidance from HD and LOW could be unfavorable catalysts for the stock.
“Investors looking to exploit the prospects of strengthening trends in this sector, with both high and low precision, starting later in 2024, will likely have better entry points in the weeks and months ahead,” Nagel said.
Home Depot stock is up 14.9% in the past year. The stock is one of 30 stocks that make up the Dow Jones Industrial Average (DJIA).,
Which rose about 13.5% in the past year, before Monday's trading.
Lowe's stock has fallen 1.1% in the past year, compared with a 21.8% gain in the S&P 500 SPX..
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