Home Centers To Gain as Competitors Go Under

New York, NY, Oct. 15, 2008--Home Depot Inc. and Lowe's Cos. may increase sales as retailers in the home-improvement industry consolidate or close, Credit Suisse Group AG said as it raised the ratings on both companies to "outperform.''

Further declines in the U.S. housing market and a consumer recession that will extend into mid-2009 will separate the "winners from the losers,'' Gary Balter, a Credit Suisse analyst, said today in a research note as he boosted the ratings from "neutral.''

"In a capital stressed world, our leading franchises have strong and stable cash flows, and their stocks tend to outperform not just early in the cycle but also when the outlook seems the weakest,'' said New York-based Balter.

Balter lowered his 12-month price target for Atlanta-based Home Depot to $27, citing the shares' 22 percent decline this year through Tuesday. He maintained his $26 estimate for Lowe's, which dropped 15 percent in the same period. Balter's new rating signals both retailers' stocks will perform better than the industry average.