Home Depot sluggish after downgrade
Goldman Sachs lowers its rating for the home improvement chain, citing tough macro and housing data.
By Andrea Tse, TheStreet
Updated: 8 p.m. ET.
Home Depot shares dipped this morning but finished up 0.2% to $31.47 to $31.74, the second-worst performer among the 30 stocks in the Dow
Jones Industrial Average ($INDU). The Dow finished the day up 193 points, or 1.8% to 10,945, its best close since May 3.
"The company is executing well, but as the stock has bounced off the bottom in the midst of choppy macro data and soft channel checks and into tougher sales and margin compares over the next two quarters, valuation and upside are less compelling," Goldman Sachs analyst Matthew Fassler explained in an investor note.
"The exceptional HD turnaround story is still very much under way but is well understood by the market today."
Fassler said he's becoming increasingly selective on the do-it-yourself sector in the face of "tough" macro data and "uninspiring" channel check. He added that housing data remain weak.
"While we have noted a diminished correlation between sector sales and housing turns, leading indicators are subdued."
Goldman Sachs currently has a $35, 12-month price target for Home Depot stock. Home Depot is up 9.7% on the year, sixth-best among the Dow stocks.
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