Home Depot's (HD) Q2 results showed that the company's comparable sales are drifting toward the higher end of the guidance range even amid a challenging housing backdrop, BofA Securities said in a note emailed Wednesday.

The investment firm said the company's higher exposure to the Professional segment will likely keep driving "outperformance in a relatively muted housing backdrop."

BofA said that a negative factor was that the company reaffirmed its 2026 outlook, but with the caveat that it now comprises a $730 million benefit from tariff refunds.

BofA noted, however, that Home Depot's incremental margin decline, compared with initial expectations in February, is being "driven by supply chain cost pressure, an industry issue, not a company specific issue."

BofA reiterated Home Depot's buy rating and decreased the company's price target to $407 from $412.

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