Home Depot’s (HD) decision to acquire SRS Distribution for over $18 billion presents more opportunities than risks for the company, UBS said in a note emailed Tuesday.
Despite operating SRS independently, the acquisition will help evolve Home Depot’s perception by making it appear more legitimate in the complex projects market.
Last year, Home Depot outlined plans to become a one-stop source for professionals in a $200 billion market segment it termed as “complex” pro projects that require many types of products and multiple days of work.
The purchase will help Home Depot gain a deeper understanding of the complex pro customer segment and equip it with the tools necessary to serve the market, UBS said.
Meanwhile, the acquisition will be dilutive to Home Depot’s fiscal 2025 earnings per share by 2.3% and then accretive by 0.2% to its fiscal 2026 EPS, the firm noted.
UBS maintained a 12-month price target of $411 for Home Depot with a buy rating.
Home Depot shares were down more than 1% in recent trading.