) to in-line from outperform.
Analyst Matthew Fassler says he downgraded his coverage view on hardlines retail to cautious from neutral. He notes the most significant driver of his downgrade of Home Depot is the reality of higher mortgage rates, which is likely to lead to a deceleration in new-home sales, a key leading indicator of do-it-yourself spending.
Fassler remains guarded on the magnitude of Home Depot's long-term growth opportunity, and is realistic about its confronting Lowe's, a rapidly growing competitor, in major metropolitan markets. Consequently, he doesn't expect significant multiple expansion relative to the hardlines group.