12:21 PM EDT, 08/08/2025 (MT Newswires) -- Home Depot ( HD ) and Lowe's (LOW) are poised for share price appreciation amid signs of demand stabilization in the second quarter, UBS Securities said in a note e-mailed Friday.

The home improvement category has remained under pressure, but is now "bottoming," UBS analysts, including Michael Lasser, wrote in the note.

The two retailers are likely to highlight favorable weather conditions and seasonal shopping trends as factors behind demand stabilization, the brokerage said. Home Depot ( HD ) is scheduled to release its latest financials on Aug. 19, while Lowe's reports a day after.

Both will likely provide "more positives than negatives on the investment case for these stocks," Lasser said.

"While the timing and magnitude of a home improvement recovery remain central to the debate, we think that (the second) quarter could showcase that (Home Depot ( HD )) and (Lowe's) are capturing demand," Lasser said. "While some of this optimism has started to be reflected in the shares, we think there's more room to go."

Investors are looking for "flattish to slightly positive" comparable sales for both companies, which Lasser said is a realistic estimate. The retailers are expected to affirm most of their full-year guidance, though Lowe's might guide to the low end of its comparable sales guidance, according to the report.

In May, Home Depot ( HD ) reiterated its full-year outlook, including a comparable sales growth estimate of 1%. Analysts are currently looking for same-store sales growth of 1.1%.

Lowe's also maintained its guidance in May, with comparable sales pegged at flat to up 1% for the ongoing fiscal year. The Street is looking for an increase of 0.5%.

"Although the backdrop will likely remain choppy in (the second half), we think that once the housing market recovers, (Home Depot ( HD ) and Lowe's) are set up well to generate meaningful earnings growth," Lasser said.

Price: 387.90, Change: +1.73, Percent Change: +0.45