Summary: Bank of America has resumed coverage of the two largest U.S. home improvement chains, assigning Home Depot a Buy and Lowe’s a Neutral rating. The firm rates Home Depot as its preferred stock in the sector, pointing to the retailer’s greater exposure to professional contractors, steady Pro comp performance, and acquisitions that could support earnings when volumes normalize.
Bank of America established price targets of $374 for Home Depot and $260 for Lowe’s. Analysts Christopher Nardone and Madeline Cech outlined their rationale, framing the home improvement sector as one still waiting on a housing recovery that has not yet arrived.
Sector backdrop
BofA’s note emphasized that existing home sales remain well below their long-term average and that elevated mortgage rates continue to hold many homeowners on the sidelines. Against that backdrop, the bank sees differences in customer mix and recent strategic moves as key discriminators between Home Depot and Lowe’s.
Why Home Depot is preferred
Home Depot’s Pro segment, which represents approximately half of its retail sales, has produced five consecutive quarters of positive comparable sales. BofA interprets that track record as evidence that Pro demand is more resilient than do-it-yourself spending in the current environment.
"HD is our preferred stock within the home improvement sector; we think HD’s comp growth will outperform driven by higher Pro penetration and expect traffic trends will hold up better than peers as we move past industry-wide price increases in 2H," the analysts wrote.
BofA’s aggregated credit and debit card data showed Home Services spending - used as a proxy for professional activity - up 3.3% for the fiscal first quarter to date. By contrast, their proxy for home improvement retail, used to approximate DIY demand, was down 0.8% over the same period.
The analysts also noted Home Depot’s recent acquisitions of SRS Distribution and Gypsum Management Supply as potential catalysts for earnings after roofing volumes normalize. Roofing shipments were described as having been severely depressed in 2025 due to an absence of major hurricanes and difficult year-over-year comparisons. BofA described 2025 roofing and complex Pro demand as trough-like, and said normalization could create incremental upside.
Lowe’s: progress but still DIY-heavy
For Lowe’s, BofA acknowledged meaningful movement toward pro customers, with the Pro mix rising from around 19% in 2019 to roughly 30% today. The acquisitions of Foundation Building Materials and Artisan Design Group were cited as evidence the company is pursuing a deeper presence in complex Pro customers.
Despite that shift, Lowe’s remains dependent on DIY consumers, who account for about 70% of its sales. The analysts made clear that a broader improvement in consumer spending and housing would be required before they adopt a more positive stance on Lowe’s sales trajectory.
"The backdrop for DIY needs to improve for us to turn more positive on a sales acceleration cycle," the note said.
BofA also flagged that Lowe’s recent comparable-sales gains have been driven more by price increases and higher average ticket size than by volume growth. The firm highlighted a decline in customer transactions of between 3% and 5% over the past three years. Looking ahead, BofA warned that once tariff-related price increases are lapped in the second half of 2026, sustaining comparable-sales growth may be difficult.
Valuation and investor implication
The analysts pointed out that Home Depot shares sit at a five-year relative trough versus Lowe’s on a forward price-to-earnings basis, a dynamic they believe creates a compelling entry point for investors who favor Home Depot’s Pro exposure and recent M&A strategy.
Takeaway: BofA’s reinstatement of coverage highlights the divide between a Pro-focused recovery pathway and a DIY-dependent recovery pathway in the home improvement sector. Home Depot’s larger share of Pro sales, stronger recent comps, and targeted acquisitions underpin the bank’s Buy call and $374 target, while Lowe’s Neutral rating and $260 target reflect the firm’s view that Lowe’s remains more exposed to the still-subdued DIY backdrop.