Home Depot upgraded as Deutsche Bank sees 'compelling' buying opportunity

Home Depot Inc.'s stock was little changed in morning trade Monday, bucking the weakness in the broad market, after the home improvement retailer was upgraded at Deutsche Bank, which cited an attractive valuation. Analyst Mike Baker raised his rating to buy, after being at hold since at least February 2013, while keeping his stock price target at $135. Baker said he remains positive on the home centers space, which continues to show strong comparable-store sales growth and has less online competition than most other retailers. Despite the recent stock weakness--Home Depot shares closed Friday 8.9% below their Nov. 27 record close of $134.74--the company continues to produce consistent earnings growth, market share and margin gains and strong free cash flow. "We further believe that recent market weakness has led to some compelling opportunities to buy quality names at lower valuations, The Home Depot being a perfect example," Baker wrote in a note to clients. The stock has lost 1.4% over the past three months, while the Dow Jones Industrial Average has shed 9.2%.

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