Home Depot reported a good quarter. Analysts waited until after the stock moved to upgrade it and raise their price target. This is called timing.
The summary says Home Depot "made the best of a terrible hand." The terrible hand is that people stopped buying houses. When people stop buying houses, they stop buying the shit you put in houses. Home Depot sells the shit you put in houses. They executed well on things they can control, which is analyst-speak for "we have no idea why this worked but it did."
Executing well on things you can control sounds profound until you remember that every company on earth can only control the things it controls. Nobody controls the things they don't control. That's what makes them uncontrollable. But analysts get paid six figures to notice this.
The upgrade came after the quarter. After the execution. After the stock already priced in the good news. Some retail trader bought shares Monday morning because his brother-in-law framed a bathroom and said the parking lot looked busy. That guy is now up 4%. The analysts who spent forty hours building a model with seventeen tabs are now telling you it's a buy at a higher price than it was last week.
Home Depot beat expectations by doing their job slightly better than expected during a housing recession. The bar was on the floor. They stepped over it. Wall Street responded by moving their price target from $382 to $411, which is precise enough to seem scientific but round enough to admit they're guessing.
Somewhere a day trader is reading this upgrade and thinking he's early.
Photo by Julia A. Keirns on Unsplash
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