Home Depot May Face Weaker Comps In Q1 As Choppy Spring And Tariff Risks Weigh

JP Morgan analyst Christopher Horvers reiterated the Overweight rating on Home Depot, Inc. HD, lowering the price forecast from $470 to $410.

Home Depot will hold its first-quarter earnings conference call on Tuesday, May 20.

Horvers noted that he is revising the first-quarter U.S. comparable sales forecast to a 1% decline, compared to the Street’s expectation of a 0.2% increase, which aligns with or slightly trails buyside expectations based on recent discussions.

According to the analyst, the downward revision is attributed to a delayed and uneven Spring season, as highlighted in the proprietary weather analysis, despite signs of improvement in April.

Also Read: Walmart, Home Depot, Target Push Chinese Suppliers To Resume Shipments, Agree To Absorb Tariffs: Report

Despite the weaker comps, Horvers updated the first quarter EPS estimate of $3.66, which remains above the $3.58 consensus from Consensus Metrix. This estimate reflects an anticipated 300 basis-point sales lift from the 53rd-week shift, which will normalize over the remainder of the year.

The analyst indicated that the gross margin estimate remains slightly below consensus by about 10 basis points, citing an estimated 80 basis-point headwind from Same-Store Sales, which improvements from inventory shrink and vendor clawbacks will partially offset.

However, Horvers projects the operating margin to be slightly above consensus, driven by what is viewed as a conservative SG&A outlook and support from the 53rd-week shift, which should help mitigate deleverage.

More broadly, vendor conversation insights suggest that overall trends are muted to slightly weaker than the fourth quarter. The analyst writes that findings from recent store visits support a softening in Pro customer activity.

Horvers added that economic uncertainty appears to be weighing on higher-ticket spending.

Considering the mixed performance outlook and Home Depot’s tendency to assess its business on a half-year basis, the analyst projects the company to maintain its full-year guidance for now and revisit it during the second quarter—particularly given heightened uncertainty around tariff policies.

The analyst also cited management’s confidence in preserving gross margin through pricing strategies, which was discussed during a recent CFO conference.

Regarding the stock, Horvers highlights that Home Depot will likely remain range-bound in the near term due to prevailing uncertainties.

Price Action: HD shares are trading lower by 0.68% to $359.27 at last check Tuesday.

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