Credit Suisse Downgrades Home Depot, Lowe's

New York, NY, Sept. 15, 2008--Credit Suisse has downgraded the ratings of two top U.S. home improvement retailers, Home Depot Inc., and Lowe's, to neutral from outperform.

"We believe that the stock prices already reflect a stronger recovery and better near term margins than we believe they can achieve in 2009 or 2010 and we do not see the housing market returning to a state of equilibrium in 2009," said Credit Suisse analyst Gary Balter in a report.

"2009 will be another very challenging year for home improvement and earnings will at best be flat, but more important, 2010 will not be a V-shaped recovery."

The analyst also said both retailers were already seeing declining sales productivity before they were hurt by the housing slowdown. Coupled with more square footage per capita means margins are not likely to return to the level they were.