- Analyst firm Jefferies downgraded Home Depot (NYSE: HD) to a Hold rating from its previous Buy rating, reflecting a cautious investment outlook.
- Despite expected strong revenue growth for fiscal Q2, concerns persist over declining customer transactions and minimal bottom-line profit growth.
- Negative market sentiment, evidenced by a high put-to-call ratio and CEO medical leave, contributes to increased uncertainty for the home improvement retailer.
On August 17, 2026, analyst firm Jefferies downgraded Home Depot to a Hold rating from its previous Buy rating. Home Depot is a major home improvement retailer with a market capitalization of approximately $336.91 billion. The stock price was $337.88 at the time of the announcement, reflecting a cautious outlook from the firm.
This downgrade occurs as Home Depot prepares for its fiscal Q2 earnings release. The stock has already decreased by over 2% year-to-date. Analysts expect revenue of $47.4 billion, a nearly 10% increase. However, expected earnings per share of $4.72 suggest that bottom-line growth, or profit, will be under 1%.
Market sentiment appears negative, especially among options traders. Data from Barchart shows a put-to-call ratio of 2.06. This is a bearish signal, as it means traders are buying more options that bet on a price drop (puts) than on a price rise (calls). The derivatives market suggests a potential 3.4% decline.
A key concern is that customer transactions have fallen for five straight quarters, as highlighted by The Motley Fool. Total transactions dropped from 394.8 million to 391.1 million compared to the previous year. This trend suggests revenue growth is driven by larger purchases, not by an increase in customer visits.
Adding to the uncertainty, CEO Ted Decker is taking a temporary medical leave. Following this news, shares of Home Depot fell 0.8% to close at $338.86 on Friday. This leadership change, combined with operational concerns, contributes to the more cautious stance from analysts ahead of the earnings report.
