Home Depot's SRS Buy 'Strengthens Market Positioning': Analysts Predict Earnings Growth

Zinger Key Points
  • The SRS Distribution acquisition builds on Home Depot’s focus on driving residential property sales growth, one analyst said.
  • The acquisition will help the company better penetrate the complex Pro customer base, another analyst added.

Shares of Home Depot Inc HD were falling on Monday, just days after the company announced the acquisition of SRS Distribution for $18.25 billion.

Wedbush On Home Depot

Analyst Seth Basham reiterated an Outperform rating, while raising the price target from $380 to $410.

The acquisition of SRS Distribution builds on Home Depot’s focus on driving residential pro sales growth, providing the company with “a well-established set of customer and supplier relationships, knowledgeable associates, an extensive footprint and solid breadth and depth of inventory with a solid acquisition track record to capitalize on the Complex Pro opportunity,” Basham said in a note.

The deal will allow Home Depot to “leverage SRS’ deep product catalog and distribution capabilities,” providing “an entry point to becoming a leading multi-trade distributor, increasing HD’s total addressable market by ~$50b to ~$1 trillion,” he added.
Check out other analyst stock ratings.

Telsey Advisory Group On Home Depot

Analyst Joseph Feldman maintained a Market Perform rating, while lifting the price target from $335 to $360.

“Home Depot expects the acquisition to be accretive to earnings in the first year post-close on a non-GAAP basis excluding synergies, but dilutive to earnings on a GAAP basis due to amortization expense,” Feldman wrote in a note. “We believe the acquisition of SRS strengthens Home Depot's market positioning and growth potential by helping better penetrate the complex Pro customer base,” he added.

Home Depot expects to exceed long-term annual sales growth of 3.0%-4.0% and earnings growth in mid- to high-single-digits as a result of the acquisition, the analyst further stated.

HD Price Action: Shares of Home Depot were down 2.94% to $372.33 at the time of publication Monday.

Now Read: US Manufacturing Activity Hits Highest Growth In 18 Months: 'Clear Signs Of Improving Conditions'

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsMoversTrading IdeasExpert IdeasJoseph FeldmanSeth BashamStories That MatterTelsey Advisory GroupWedbush
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!