Hardline/Broadline/Food Retail: Q1'26 Previews: HD, LOW, TGT – Something For Everyone

Research evidence excerpt

Hardline/Broadline/Food Retail: Q1'26 Previews: HD, LOW, TGT – Something For Everyone

Idea

May 12, 2026 01:49 AM GMT

Morgan Stanley & Co. LLCMHardline/Broadline/Food Retail | North America Simeon Gutman, CFA

Equity Analyst

Q1'26 Previews: HD, LOW, TGT Simeon.Gutman@morganstanley.comPedro Gil, CFA +1 212 761-3920

Pedro.Gil@morganstanley.com +1 212 761-2022

– Something For Everyone Zachary Abraham

Research Associate

Zach.Abraham@morganstanley.com +1 212 761-5977

Industry backdrop unsupportive of a topline inflection, though Skylar Tennant

both HD & LOW are managing well. Expecting a slight comp ResearchSkylar.Tennant1@morganstanley.comAssociate +1 212 761-9963

miss/beat for HD/LOW while valuation could remain depressed

Hardline/Broadline/Food Retail

near-term due to minimal catalysts. TGT moving in the right North America

direction as sales initiatives win back guests/traffic. Industry View In-Line

We are Overweight-rated HD and LOW. While we expect near-term demand trends

to remain tepid due to macro, housing, and consumer pressures, we believe the

industry is moving past the '25 trough, as suggested in our recent April contractor

survey. With both HD and LOW trading near 1-year trough valuations (~20.5x/~17.5x

NTM P/E, respectively, per Exhibit 1 ), we think the market is pricing in a slower-for-

longer industry backdrop, in which consumer sentiment remains subdued,

geopolitical uncertainty adds pressure to demand, and housing turnover fails to

inflect given a protracted period of high interest rates. Given this context, we think

both HD & LOW offer attractive entry points for those with duration as the long-

term structural demand drivers of the Home Improvement industry are intact and

both companies are well-positioned to capture operating leverage upside in the