Good news for home improvement stock Home Depot (HD), as a new survey of contractors suggests that customers are not pulling in their wallets completely. Indeed, the common recession practice of improving one’s homefront seems to be in full swing, and contractors are reporting the benefits therein. But investors were a bit more skeptical, and sent Home Depot shares down fractionally in Tuesday afternoon’s trading.
The word from Morgan Stanley, noted a report from CNBC, is that contractors are a lot more upbeat in this economy than you might expect. In fact, according to the pool of respondents—37 specialist painters and a bloc of 94 general contractors, remodelers, and regular painters—most of them were looking for business to improve in the near term.
In fact, many of these respondents noted that they had a “healthy backlog of projects,” and were looking for more to show up in 2025’s second half. There was a gain in demand for big projects, and very few proved concerned about clients stepping down to smaller projects instead. Tariffs were a concern, especially since the study was done just before April 2, when the tariffs started up in earnest. Still, all of this ultimately led to Morgan Stanley cutting their price target on Home Depot from $450 per share to $410.
Good News for Some Budgets
Meanwhile, in a bid to help make sure the rosy projections come out right, Home Depot announced plans to augment its lineup of tax-free items for service members and the military. A new effort between Home Depot and the Army & Air Force Exchange Service will bring several new items to the tax-free side of things at Home Depot, which represents a savings of anywhere from 1.8% in Alaska to as high as 9.55% in parts of Tennessee, when state and local taxes are combined.
Moreover, military members are also in line for a 10% military discount for full-priced non-appliance items, and free shipping for large appliances. This puts it nicely ahead of immediate rival Lowe’s (LOW), which offers up a straight 10% military discount.
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HD stock based on 20 Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 8.21% rally in its share price over the past year, the average HD price target of $434.21 per share implies 20.81% upside potential.
