Home Depot acquisition right move despite lower margins, says Citi

Citi analyst Steven Zaccone keeps a Buy rating on Home Depot with a $415 price target following the company’s acquisition of SRS Distribution. The deal fits with Home Depot’s strategy to grow with the large, complex pro, while unlocking an incremental total addressable market and increasing supply chain capabilities, the analyst tells investors in a research note. The firm says the deal is also additive to the growth profile for Home Depot. Although the business carries a lower margin profile, it is the right move for the company to be addressable market focused at this point in its maturity curve. says Citi. It believes “investors will have to grapple with the valuation implications from buying a lower margin business.”