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Why ANGI Homeservices Stock Soared 60% Last Month

By Jeremy Bowman – Jun 2, 2020 at 12:15AM

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The home-improvement marketplace appeared to be making a rapid recovery from the shutdowns.

What happened

Shares of ANGI Homeservices (ANGI) were surging last month as the stock rallied after management pointed to signs of a "V-shaped recovery" in its first-quarter earnings report. The stock also benefited from other signs that Americans were spending on home improvement needs as Home Depot and Lowe's showed strong comparable sales growth in their first quarters, and the home improvement spending was solid during April, according to the Census Bureau's retail sales report, despite lockdown conditions across much of the country.

According to S&P Global Market Intelligence, the stock finished the month up 60%. The chart below shows the rally that followed the earnings report.

^SPX Chart

^SPX data by YCharts

So what

ANGI shares increased 7% on May 7 after its earnings report, and gained as much as 23% during the session. Results for the home-improvement marketplace were impacted by the COVID-19 pandemic as revenue rose 13% with sales essentially flat in March and into April, but CEO Brandon Ridenour said that sales were trending positive in most categories by the end of April. That, along with optimism about the broader economic reopening seemed to lift the stock, which had sold off sharply during the market crash in March. 

Two men looking at home improvement plans

Image source: Getty Images.

The stock surged again on May 11 on a bullish analyst note from Citigroup analyst Nicholas Jones, who raised his price target form $6.50 to $10 because of improved trends from the home improvement specialist and maintained his buy rating on the stock. 

The following week, strong results from Lowe's and Home Depot also seemed to support the stock's gains.

Now what

Home improvement spending appears to be a winner during the pandemic thus far as Americans stuck at home with social distancing measures and work-from-home practices are finding new reasons to upgrade their living arrangements and don't have the other usual ways to spend discretionary income , with restaurants still mostly closed and travel not really an option.

Whether this is really an opportunity for ANGI remains to be seen, but investors seem to believe the crisis is now a tailwind for the stock as the share price is the highest it's been in more than nine months. If home improvement spending remains strong, the stock should benefit.

Jeremy Bowman owns shares of Angie's List, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Angi Inc. Stock Quote
Angi Inc.
Citigroup Inc. Stock Quote
Citigroup Inc.
$42.99 (-2.87%) $-1.27
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
$266.58 (-1.61%) $-4.36
Lowe's Companies, Inc. Stock Quote
Lowe's Companies, Inc.
$186.02 (-1.12%) $-2.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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