A boom in home renovations amid the pandemic will drive record sales growth for home improvement chains Home Depot, Lowes, according to Bank of America

a person standing in front of a building: CHRIS DELMAS/AFP via Getty Images

© CHRIS DELMAS/AFP via Getty Images
CHRIS DELMAS/AFP via Getty Images

  • Home Depot and Lowe’s are tracking to report record second quarter sales growth, according to Bank of America.
  • The bank said its own credit-card spending data showed a continued surge in home improvement spending throughout the second quarter.
  • The spending boom has in part been driven by the COVID-19 pandemic, as people look to improve their living spaces as they spend more time working or learning at home.
  • Due to the strong spending data sourced by Bank of America, the firm raised its second quarter earnings estimates for Home Depot and Lowe’s, again. 
  • Home Depot reports earnings Tuesday morning, while Lowe’s reports Wednesday morning.
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Consumers are itching to remodel and upgrade their living spaces as they spend more time at home working and learning due to the COVID-19 pandemic.


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That’s according to Bank of America, who looked at its own credit-card spending data, among other data sources, to conclude that Home Depot and Lowe’s could experience record sales growth when they report earnings later this week. 

That conclusion led to the bank increasing its second quarter earnings estimates for both Home Depot and Lowe’s.

The firm now expects same-store sales growth of 15% for Lowe’s and 11% for Home Depot. Bank of America has a buy rating for Lowe’s and a neutral rating for Home Depot.

According to the note, BofA has expected a cool down in home improvement sales trends given the recent “extreme strength,” but that dip has not come to fruition yet, probably due to pent-up demand in the home improvement space because of COVID-19.

Specifically, BofA sees three main reasons for the surge in home improvement spending. First, there had already been pent-up demand for home improvement projects that were put off prior to the COVID-19 pandemic. Therefore, when people spent more time at home and had more time on their hands, they were finally able to tackle delayed projects.

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Second, popular home improvement projects that have popped up due to COVID-19 have pushed incremental demand. Those projects include building garden beds to grow food, adding a guest room or home office, and enhancing outdoor spaces.

Third, the pandemic pulled forward demand for home improvement projects. But that pulled forward demand could end up acting as a double-edged sword, as it could result in a lull in renovation activity as new home projects cool off, BofA said.

The bank raised its Lowe’s price target to $176 from $170, representing potential upside of 14% from Friday’s close. For Home Depot, it raised its price target to $290 from $270, representing potential upside of 3% from Friday’s close.

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