Home Depot price target lowered to $340 from $360 at Morgan Stanley

Morgan Stanley analyst Simeon Gutman lowered the firm’s price target on Home Depot to $340 from $360 and keeps an Overweight rating on the shares. Using assumptions for a 5% decline in comps and 14% EBIT margin, as mentioned on the Q4 call, the firm said this would yield about $14.60 in FY23 EPS, which would represent about a 12.5% year-over-year decline and about 13% below where consensus was into the print. While Home Depot shares were lower commensurate with the downward FY23 EPS revision, the firm adds that the guidance doesn’t resolve the market’s biggest near-term concern, namely a top-line slowdown, for a traditionally cyclical category, so there is still risk to estimates even after the below-Street outlook.