What happened
There are two good reasons Home Depot (HD -0.31%) stock jumped today. Shares of the home improvement retailer rose as much as nearly 6% early Tuesday. The stock didn't hold that sharp gain but it was still higher by 1.2% as of 3:21 p.m. EST.
So what
The first catalyst was from investment banking firm Cowen, while the second came from the latest inflation data released by the Labor Department. Cowen analyst Max Rakhlenko today named Home Depot one of his firm's top investment ideas for 2023. That call was made for company-specific reasons, but investors also felt new economic data released today should support Home Depot shares moving into next year.
Now what
Rakhlenko reiterated his equivalent-to-a-buy rating for Home Depot shares and boosted his firm's price target from $350 to $379 per share in a report shared by Barron's. The analyst cited advancements the company has made in attracting the professional consumer segment. Home Depot's Pro business has been a focus for new investments and helps balance the do-it-yourself (DIY) side of the business. That helps provide the retailer strength throughout the housing sector cycles.
Today's release of November's Consumer Price Index (CPI) data helped to signal that the pace of rising interest rates may soon ease, helping to keep mortgage rates near current levels. That would bode well for the housing sector going into next year. Consumer prices rose at a slower pace than expected, giving investors reason to believe the Federal Reserve could start to slow or end interest rate increases.
With its investments to bolster its Pro business, Home Depot can be successful whether new home buying is booming or if residential consumers are looking to spend to maintain older homes. That is a position of strength and a good reason why the Cowen analyst thinks shares could still rise more than 15% from current levels.
