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Home Depot, Lowe's See Share Price Targets Boosted

The home improvement giants have their price targets raised by Wells Fargo and Morgan Stanley ahead of earnings reports.

Home Depot  (HD) - Get Home Depot, Inc. (HD) Report and and Lowe's Companies  (LOW) - Get Lowe's Companies, Inc. (LOW) Report had their share price targets raised Tuesday by analysts at Wells Fargo an Morgan Stanley as both home improvement retailers prepare to release quarterly reports next week.

Home Depot shares were rising 1% to $277.68, while Lowe's was up nearly 1% to $154.98.

Home Depot is scheduled to report earnings on Aug. 18 while Lowe’s is slated to report on Aug. 19. 

Wells Fargo analyst Zachary Fadem raised his price target on Home Depot to $300 from $295, while keeping an overweight rating on the shares. Fadem also raised his price target on Lowe's to $180 from $165 and kept an overweight rating on the shares.

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Fadem said in a note to clients that he expects Lowe's to outcomp Home Depot for the second straight quarter due to its higher DIY mix, as well as its focus on key categories and lower exposure to recent coronavirus hotspots.

Fadem said that foot traffic at home improvement stores rebounded to robust levels in the second quarter.

"While online buying brings added convenience," Fadem said, "we believe strong foot traffic reflects consumers’ immediate need/desire for products/services, need for assistance and demand for items that cannot be shipped easily (Paint, Live Goods, Lumber, etc.)."

Meanwhile, Morgan Stanley analyst Simeon Gutman raised his price target on Home Depot to $285 from $260, while keeping an overweight rating on the shares. Gutman, who said that he thinks Wall Street's estimates are too low, expects Home Depot to post a high-teens U.S. comparable store sales figure with earnings of at least $4.00 per share. 

In addition, Gutman raised his price target on Lowe’s to $160 from $150 with an overweight rating. Like Fadem, Gutman wrote that Lowe's should see stronger second-quarter comps than Home Depot due its higher DIY penetration.