HD Supply Shares Initiated At Buy, $43 Price Target By Longbow

Longbow Research's Chris Dankert initiated HD Supply Holdings HDS at Buy with a $43.00 price target.

HD Supply's Facilities Maintenance (FM) and Waterworks business were expanding, driving "almost annuity-like value streams" according to the analyst. "HDS is the 400lb gorilla in the FM market (largest and most profitable business) where the company steadily generates ~7% annual growth" said Dankert. The sector's great success has driven HD's margin expansion to healthy levels according to the analyst.

Dankert also appreciated the company's efforts to reduce debts and believes the HD Supply will continue to do so in the future. "In short, we see HDS' focus on reducing dedbt, with another call-date on the horizon, and steady EBITDA growth as working together to meaningfully reduce interest expense and HDS' leverage ratio, driving both earnings and multiple expansion" said the analyst.

At the time of writing, HD Supply was trading down 1.05 percent at $34.78.