Home Depot's Stock Gets a Boost From Morgan Stanley Upgrade

By Tomi Kilgore Markets MarketWatch Pulse

Shares of Home Depot Inc. edged up less than 0.1% in midday trade Thursday, but bucked the selloff in the broader retail sector, after Morgan Stanley moved to a bullish rating on the home improvement retailer. The SPDR S&P Retail ETF shed 1.2% in midday trade. Analyst Simeon Gutman upgraded Home Depot to overweight, after being at equal weight since June 2014. He boosted his stock price target to $165, which was 14% above current levels, from $150. Gutman said he has greater confidence in the growth of the home improvement industry, given research that suggests the housing recovery is till in the 'middle innings' and the belief that any negative impact from rising interest rates in the near term are being overestimated. He said Home Depot's stock had performed well in previous rising-rate environments. And even in the most aggressive tightening periods, Gutman said it took about two years to hurt spending on home improvement. Home Depot's stock has rallied 11% over the past three months, while the SPDR retail ETF has lost 6.9% and the Dow Jones Industrial Average has climbed 9%.

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