) to sell from hold.
Analyst Michael Baker says he took a more cautious tone late in 2002 based on Home Depot sales and earnings per share slowing quicker than he expected. The situation now appears even worse than he thought, with -10% fourth quarter same store sales concerning him along with the company's six-month outlook, particularly as Lowe's has better business, making things more competitive for Home Depot.
Baker now is using a lower multiple of 12 for Home Depot's stock, which he believes is in-line with the company's true growth rate, yielding a $20 target. He cut the 29 cents fourth quarter earnings per share estimate 26 cents and cut the $1.75 fiscal 2004 (Jan.) estimate to $1.70.