In spite of Home Depot's increased earnings-per-share forecast in their quarterly earnings report Tuesday morning, depressed consumer spending could stifle the stock, one analyst told CNBC on Tuesday.
Less than a week after Jeffries downgraded Home Depot to "hold" from “buy,” senior equity research analyst Daniel Binder stands by the call, saying it "was more about our change in view on the macro outlook.”
Jeffries issued a $33 price target on Aug. 10.
The stock closed on Tuesday at $33.12, up around 5.28 percent from the previous day's close.
Binder said Jeffries still expected the company to outperform Lowe’s in the home-improvement market.
Home Depot announced a 14.3 percent increase in net profit compared with the year-earlier period, and a 4.2 increase in sales. Meanwhile, Lowe's reported flat earnings compared with last year, and decreased its sales outlook.
“Home Depot not only has a more convenient store base in a lot of major markets, but it has done a much better job in improving the service levels,” said Binder. “I think they’re recapturing some customers.”
The company’s earnings report this morning “was strong all around” said Binder, citing the rebound in their seasonal business and repairs related to storm activity, as well as their core business. "There wasn’t really anything to complain about” in the report, he said.
Even though Home Depot is “clearly” grabbing a greater slice of the market, Binder said, Jeffries decided it wasn't enough to offset the shrinking pie and the “potentially bigger swings in consumer spending.”
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Disclosure information was not available for Daniel Binder or his company.