Citi Lowers Estimates For Home Depot, Lowe's On Housing Weakness

Worse-than-expected U.S. housing data is taking its toll on home improvement stocks. Analyst Deborah Weinswig of Citigroup lowered her estimates on Home Depot Inc. (HD) and Lowe’s Cos. (LOW) when data showed new residential home sales fell 23.3% in September year over year after falling 27.2% in August and 17.7% in July.

“The percentage of mortgages going into foreclosure continues to rise and the housing market remains challenging,” she wrote in a note to clients. “Additionally, total housing turnover continues to fall year over year, and near-term prospects appear weak based on a falling housing market index.”

The analyst lowered her third quarter per share earnings estimate on Home Depot to US60¢ from US63¢ and to US47¢ from US49¢ in the fourth quarter. She also lowered her target price on the shares to US$33 from US$35.

She lowered her Lowe’s third quarter estimate to US41¢ per share from US43¢ and in the fourth quarter to US37¢ from US39¢. She lowered her target price on Lowe’s to US$31 from US$36.

HD vs. LOW 1-yr chart: