03:13 PM EDT, 05/21/2025 (MT Newswires) -- Home Depot's ( HD ) fiscal Q1 results indicate the company continues to capture steady home improvement demand despite an uncertain macroeconomic backdrop, UBS Securities said in a note emailed Wednesday.

The retailer on Tuesday reported fiscal Q1 adjusted earnings of $3.56 per diluted share, down from $3.67 a year earlier and just below both the UBS and FactSet consensus estimate of $3.60. Net sales for the quarter ended May 4 rose to $39.86 billion from $36.42 billion a year earlier, topping the $39.3 billion analyst forecast.

The company continues to expect fiscal 2025 adjusted EPS to decline about 2% from $15.24 a year earlier, with sales growth pegged at around 2.8%.

The firm said it believes Pro sales increased in the low-single-digit range during the quarter, while consumer sales declined by a similar margin.

It noted that SRS, the distribution business acquired by Home Depot ( HD ) last year, "performed well." The firm also observed continued engagement in smaller consumer projects, while larger discretionary projects remained under pressure.

The brokerage said Home Depot ( HD ) likely saw a modest lift in appliance sales due to some pull-forward in demand. The company is expected to manage the impact of new tariffs through a portfolio pricing approach, resulting in some product-specific increases and decreases but keeping overall price levels relatively steady.

"Net-net, the stock is set up well from here. The business is improving. It's entering a seasonally strong period of the year for the shares. Demand is set to inflect. Thus, we think the risk-reward is tilted higher," according to the note.

UBS has a buy rating on the stock with a price target of $475.

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