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Piper Jaffray Reaffirms “Overweight” Rating for Home Depot; Raises Price Target (HD)

On Wednesday analysts at Piper Jaffray reiterated its rating on The Home Depot, Inc. (HD) while also raising the target for the company due to a strong third quarter.

The analysts maintained the “Overweight” rating for HD; the price target was raised from $70 to $83. The new target is a +31% upside from Tuesday’s closing price of $63.38.

Piper Jaffray noted, “We are maintaining our OW rating and raising our PT to $83 from $70 on HD shares following a solid Q3 beat-and-raise. While sales and adjusted EPS guidance was increased for F12 to +5.2% (from +4.6%) and $3.03 (from $2.92), we continue to believe that the implied Q4 guidance looks conservative. At this point, HD has not included the impact from Hurricane Sandy in guidance but expects at least the same benefit as last year’s Hurricane Irene (~$360M). Based on our recent survey work, we remain very bullish on our outlook for home remodeling spend in 2013 and 2014. Finally, we are rolling our PT forward to be based off of our 2014 given our conviction in a multi-year remodeling tailwind that can drive accelerating comp and EPS growth. Our $83 PT is based on 20x (unchanged) our 2014 EPS of $4.13.”

Home Depot shares were down 17 cents, or -0.27%, in premarket trading on Wednesday.

The Bottom Line
Shares of Home Depot (HD) have a 1.83% dividend yield, based on last night’s closing stock price of $63.38. The stock has technical support in the $57-$58 price area. If the shares can firm up, we see overhead resistance around the $64-$65 price levels.

The Home Depot, Inc. (HD) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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