Home Depot shares slid toward a fresh 52-week low Wednesday as Wall Street analysts turned increasingly cautious on the home-improvement giant amid a prolonged housing slowdown, weakening renovation demand, and rising mortgage rates that continue to pressure the broader housing market. At the same time, rival Lowe’s received a major vote of confidence from Wall Street after Citigroup upgraded the retailer to Buy, sharpening the growing divergence between America’s two largest home-improvement chains just days before both companies report earnings.
The split in analyst sentiment comes during one of the most important weeks of the spring retail earnings season. Home Depot is scheduled to release first-quarter results on Tuesday, May 19, with Lowe’s following a day later on Wednesday, May 20. Both companies operate in the same interest-rate-sensitive housing economy, but investors and analysts are increasingly viewing the retailers through very different lenses as elevated borrowing costs continue freezing parts of the U.S. housing market.
Citigroup analyst Steven Zaccone upgraded Lowe’s from Neutral to Buy on Tuesday and issued a $285 price target, according to Bloomberg, implying roughly 26% upside from recent trading levels. Zaccone told clients he expects Lowe’s to outperform both industry peers and Home Depot through 2026 as the home-improvement cycle begins stabilizing after multiple difficult years tied to rising interest rates and falling home turnover.
The bullish Lowe’s call stood in sharp contrast to the latest round of cuts targeting Home Depot. On Wednesday, Truist Securities analyst Scot Ciccarelli lowered his Home Depot price target from $424 to $394, extending a growing wave of negative revisions that has pushed the stock near its lowest level in a year. Earlier this week, Gordon Haskett analyst Chuck Grom cut his Home Depot target even more aggressively, reducing it from $395 to $330.
Shares of Home Depot fell another 3.2% Wednesday, underperforming the broader market even as the Nasdaq and S&P 500 closed at record highs. The stock now trades below its 200-day moving average, while technical indicators increasingly point toward oversold conditions.
Behind the weakness is a housing market that remains stuck in a prolonged freeze. Mortgage rates climbed back near 6.5% this week following another surge in Treasury yields after hotter-than-expected inflation data. Higher borrowing costs continue discouraging both home purchases and refinancing activity, sharply reducing the housing turnover that typically drives spending on remodeling, repairs, appliances, kitchens, flooring, and other major home-improvement projects.
Economists and housing analysts have repeatedly warned that elevated mortgage rates are trapping millions of homeowners in existing low-rate mortgages secured during the pandemic-era housing boom. With many homeowners unwilling to give up mortgage rates below 4%, fewer homes are changing hands across the country, weakening demand for the types of large renovation projects that fueled Home Depot’s explosive growth during the pandemic.
The broader economic backdrop worsened Wednesday after the Bureau of Labor Statistics reported that the Producer Price Index rose 6% year over year in April, marking the fastest wholesale inflation pace since 2022. Much of the increase was tied to rising energy costs connected to the ongoing Iran war, which has pushed oil prices sharply higher in recent weeks and reignited fears that inflation may remain elevated longer than markets previously expected.
Treasury yields climbed further after the report, with the 30-year U.S. Treasury yield rising above 5% for the first time since 2007. The 10-year Treasury yield approached 4.5%, directly increasing pressure on mortgage rates and further complicating the outlook for housing-related companies.
Home Depot’s own fundamentals have added to investor concerns. In its previous quarterly report, the retailer posted a 3.8% year-over-year revenue decline, continuing a multi-quarter stretch of weakening sales tied to slowing renovation demand. Management, led by Chair, President and CEO Ted Decker, guided fiscal 2026 toward flat-to-low-single-digit comparable sales growth and projected operating margins between 12.4% and 12.6%, down from 13.1% in fiscal 2025.
While Lowe’s faces many of the same macroeconomic pressures, analysts increasingly believe the company may be navigating the downturn more effectively. Under Chairman, President and CEO Marvin R. Ellison, Lowe’s has aggressively expanded its professional-contractor business through acquisitions, distribution growth, and new branch openings — areas historically dominated by Home Depot.
Analysts also note that Lowe’s carries somewhat less exposure to large discretionary remodeling projects tied to affluent homeowners, leaving it potentially better positioned if consumers remain cautious on big-ticket spending.
Lowe’s reported fiscal 2025 sales of $86.3 billion and guided fiscal 2026 revenue toward a range of $92 billion to $94 billion, with adjusted diluted earnings per share expected between $12.25 and $12.75. Comparable sales are projected to range from flat to up 2%.
For investors, next week’s earnings reports may now serve as a major test of Wall Street’s widening divergence thesis. If Lowe’s delivers the stronger results and guidance analysts expect while Home Depot disappoints again, the analyst rotation currently underway could accelerate significantly.
But if Home Depot surprises to the upside and shows signs that housing demand may finally be stabilizing, the recent selloff could ultimately prove to be an overreaction for a stock that has already lost more than 20% from its peak.
Either way, Wall Street is no longer treating Home Depot and Lowe’s as the same trade.
JBizNews Desk
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