Wedbush Sidelined with Concerns for Home Depot's (HD) Deceleration Trends
Wedbush Maintains a Neutral rating and $120 price target on Home Depot (NYSE: HD) with concerns of deceleration. Analyst Seth Basham said that risk/reward for HD is balanced, keeping him neutral on shares.
Basham commented on HD, saying, "Normalized spring season along with strength in housing drives beat and raise, but concerns of decelerating trends lead stock to reverse early morning gains. While HD missed whispers, the company beat consensus 1Q15 estimates, fueled by U.S. comps of 7.1% on the back of strong sector trends and continued market share gains and despite headwinds of ~30 bps from West Coast port delay issues and ~15 bps from commodity deflation. Seasonal categories outperformed on more normal spring weather y/y, but sales strength was broad-based across categories, regions and customer demographics. We see the recovery continuing to broaden on the back of strengthening housing trends and steadier economic growth, as evidenced by solid comp traffic growth and continued trading up within categories. That points to potential upside to consensus and newly raised guidance for the year, in our view. That said, due to elevated valuations not reflecting vulnerability to an interest rate rise shock, we continue to believe the risk/reward for HD is more balanced, keeping us NEUTRAL on shares."
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Shares of Home Depot closed at $112.34 yesterday.