UPDATE: J.P. Morgan Downgrades HD Supply Holdings to Neutral, Lowers PT Following Unexpected Estimates Cut, Valuation Support Challenge

In a report published Wednesday, J.P. Morgan analyst C. Stephen Tusa Jr. downgraded the rating on

from Overweight to Neutral, and lowered the price target from $27.00 to $23.00. In the report, J.P. Morgan noted, “We are downgrading HDS to N after an unexpected cut to estimates that challenges the valuation support of our OW rating. Indeed, a key aspect of our prior view was that a reasonable degree of visibility on 2013 would help establish a track record on growth into next year, important for a medium term story built around the top line. We recognize the ongoing investment/outgrowth initiatives, but for a stock with this degree of financial leverage that is already discounting 2014 EBITDA growth, there is less room for earnings slippage than at others. With shares still up significantly since the IPO, >85% of the Street at ‘buy', and valuation now less attractive on lower numbers, we step to the sidelines.” HD Supply Holdings closed on Tuesday at $21.97.