Home Depot Stock Rises Ahead of Earnings on Raised Price Targets

Home Depot's (HD) stock rose overnight as investors positioned themselves ahead of the company's second-quarter earnings report. Stifel raised its price target for Home Depot to $340, citing the retailer's relative strength in the home improvement market.

However, Stifel also cautioned that expectations for valuation already appear high and require a meaningful housing and home-improvement recovery to support further upside. This is reflected in Home Depot's premium valuation compared to its rival Lowe's (LOW), which trades at a lower price-to-earnings multiple of 18.2.

RBC Capital also raised its price target for Home Depot to $343, citing the company's investments in its distribution network and valuable store footprint as advantages that could help it capture additional market share. However, RBC warned that investors may already be pricing in a relatively quick rebound in housing activity, leaving less room for disappointment if the recovery develops more slowly than expected.