Home Depot's (HD) higher exposure to professional customers is expected to benefit it in Q2 more than Lowe's (LOW), BofA Securities said in a Monday note previewing the upcoming earnings of home improvement retailers.

Based on aggregated spending data from Bank of America (BAC) credit and debit cards, spending on housing-related services, which BofA analysts used as a proxy for professional customer spending, continues to be higher than spending by do-it-yourself customers, and Housing-related services spending grew 5.5% in Q2 from 4% in the previous quarter, while home-improvement spending swung to 0.5% from negative 0.9% in the prior quarter, according to the note.

Home Depot's Pro heavy business model should drive outperformance in Q2, and help it attain 2026 EPS near the midpoint of its guidance, the analysts said. Lowe's (LOW) is seen finishing the year at the lower end of its EPS outlook, given a downside risk to its margins in H2 if higher promotional rates are needed to attract customers.

Further, the two companies are expected to use tariff refunds to help absorb supply chain costs, as well as potentially support promotions costs, the analysts said.

BofA reiterated Home Depot's stock rating at buy and increased the price target to $412 from $374. The brokerage also reiterated Lowe's stock rating at neutral and lowered the price target to $256 from $257.

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