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Lowe’s Companies (NYSE:LOW) and Home Depot (NYSE:HD) were both downgraded on Tuesday by Telsey Advisory Group to Market Perform ratings from Outperform ratings just ahead of earnings reports from the two home improvement retailers.
In the near term, analyst Joseph Feldman and team expect Lowe’s (LOW) and Home Depot (HD) to experience a slightly steeper slowdown related to weak housing market trends.
The most recent Housing Scorecard from Telsey still depicts a weak housing market. “The data seems to show a bottoming for the housing market, with the trend line indicating some stability and less negative trends,” noted Feldman. Crucially, the bottoming phase has the potential to take some time to play out.
Telsey’s housing data dive: “Of the 10 data points we track, we currently view three as positive for the housing market, one mixed, and six negative, compared to two positive, three mixed, and five negative in February. Importantly, home prices, which is a key driver of home improvement sales, have worsened—the S&P Core Logic Case-Shiller national index for home prices fell 0.5% YoY in May, with further declines expected going forward, including Freddie Mac forecasting an annual price decline of 2.9% in LTM 1Q24 and a decline of 1.3% in LTM 1Q25.”
Shares of Lowe’s (LOW) fell 1.49% in premarket trading to $219.98 and Home Depot (HD) slipped 1.35%.
More on Home Depot and Lowe’s:
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