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- House Depot and Lowe’s are monitoring to report file second quarter gross sales development, based on Bank of America.
- The bank mentioned its personal credit-card spending information confirmed a continued surge in residence enchancment spending all through the second quarter.
- The spending increase has partially been pushed by the COVID-19 pandemic, as folks look to enhance their dwelling areas as they spend extra time working or studying at residence.
- Because of the robust spending information sourced by Bank of America, the agency raised its second quarter earnings estimates for House Depot and Lowe’s, once more.
- House Depot reviews earnings Tuesday morning, whereas Lowe’s reviews Wednesday morning.
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Shoppers are itching to transform and improve their dwelling areas as they spend extra time at residence working and studying as a result of COVID-19 pandemic.
That is based on Bank of America, who checked out its personal credit-card spending information, amongst different information sources, to conclude that House Depot and Lowe’s may expertise file gross sales development after they report earnings later this week.
That conclusion led to the bank rising its second quarter earnings estimates for each House Depot and Lowe’s.
The agency now expects same-store gross sales development of 15% for Lowe’s and 11% for House Depot. Bank of America has a purchase ranking for Lowe’s and a impartial ranking for House Depot.
Based on the observe, BofA has anticipated a quiet down in residence enchancment gross sales tendencies given the latest “excessive energy,” however that dip has not come to fruition but, in all probability attributable to pent-up demand within the residence enchancment area due to COVID-19.
Particularly, BofA sees three fundamental causes for the surge in residence enchancment spending. First, there had already been pent-up demand for residence enchancment tasks that had been postpone previous to the COVID-19 pandemic. Due to this fact, when folks spent extra time at residence and had extra time on their arms, they had been lastly in a position to deal with delayed tasks.
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Second, in style residence enchancment tasks which have popped up attributable to COVID-19 have pushed incremental demand. These tasks embrace constructing backyard beds to develop meals, including a visitor room or residence workplace, and enhancing outside areas.
Third, the pandemic pulled ahead demand for residence enchancment tasks. However that pulled ahead demand may find yourself performing as a double-edged sword, because it may end in a lull in renovation exercise as new residence tasks cool off, BofA mentioned.
The bank raised its Lowe’s price goal to $176 from $170, representing potential upside of 14% from Friday’s shut. For House Depot, it raised its price goal to $290 from $270, representing potential upside of three% from Friday’s shut.