Following The Home Depot, Inc.'s (NYSE: HD) third quarter results on Tuesday morning, Gary Balter of Credit Suisse reiterated an Outperform rating with a price target raised to $110 from a previous $95.
"While the strong comp of 5.2 percent (U.S. comp was 5.8 percent) was slightly below the buyside whisper, the result was in-line with our store checks, macro and supplier data," Balter wrote. The analyst adds that the company's total comps would have been higher if not for the negative impact from currency, particularly as Canadian stores outperformed U.S. stores on the top-line.
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Balter notes that the "biggest nitpick" stemming from Home Depot's quarter has been that SG&A growth as a percent of the sales increased 42.3 percent, greater than management's guidance of 23 percent for the second half of 2014. However, the analyst believes the company can produce SG&A growth as a percent of the sales increase below 30 percent.
Perhaps flying a bit under the radar is Home Depot's 3.2 percent traffic growth. Balter states that there are few retailers who are not growing stores that can make similar claims, especially given a 5 percent drop in retail traffic.
Looking forward, Balter expects Home Depot to continue seeing "steady" traffic increases but does note that shares have risen 17.3 percent since the second quarter, which may lead some investors to trimming their position.
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