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HD Supply’s 3Q Sales Lag Estimates; Street Says Hold
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HD Supply’s 3Q Sales Lag Estimates; Street Says Hold

HD Supply Holdings’ (HDS) 3Q revenues of $827.5 million fell short of analysts’ estimates of $836.3 million but increased 0.3% year-over-year. The wholesale distributor to the maintenance, repair and operations (MRO) industries reported 3Q earnings of $0.47 per share, which came in-line with the Street’s estimates and increased by one cent from the year-ago quarter.

HD Supply said that its preliminary November sales reached nearly $222 million, representing an average daily increase of about 2.9% from the year-ago quarter. (See HDS stock analysis on TipRanks)

On Nov. 15, the company agreed to be acquired by leading home improvement retailer Home Depot (HD). Per the terms of the deal, Home Depot will acquire HD Supply’s outstanding shares for $56 per share in cash. The company expects to close the $8 billion deal during its fiscal fourth quarter, ending on Jan. 31, 2021. Home Depot expects the transaction to be accretive to earnings in fiscal 2021.

Following the acquisition deal, Raymond James analyst Sam Darkatsh downgraded HDS stock to Hold from Buy on Nov. 17. He said, “We believe it is highly unlikely that subsequent bids will materialize, and we peg the annualized equity return until deal close comfortably below 5%.”

Meanwhile, most of the Street is sidelined on the stock. The Hold analyst consensus is based on 7 Holds and 2 Buys. The average price target stands at $49.14 and implies downside potential of about 12% to current levels. Shares have advanced by 38.8% year-to-date.

Related News:
Home Depot Brings Back HD Supply In An $8B Deal; Telsey Turns Bullish
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