This article first appeared on GuruFocus.

Home Depot (NYSE:HD) hasn't even reported Q3 earnings yet, but one major analyst is already tapping the brakes. Stifel's Andrew Carter cut his rating from Buy to Hold and dropped his price target to $370 from $440, saying the home-improvement category just isn't showing much momentum right now. He called the space stagnant, and worries it could look even softer as the industry runs into tricky November and December comparisons.

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Carter isn't bearish on the long-term outlook he still thinks the fundamentals of the sector are solid but the near-term picture feels too uncertain for him to stay positive. He trimmed his estimates for both Home Depot and Lowe's across the rest of fiscal 2025 and into 2026 and 2027, arguing that the recovery is moving slower than Wall Street expects. His projections now sit well below consensus.

He also expects Home Depot's Q3 update to show weaker same-store sales and possibly raise questions about its Complex Pro strategy, especially after more than $20 billion in recent M&A. For now, analysts still look for Q3 EPS of $3.84 on $41.2 billion in revenue.