Credit Suisse Sees Higher Upside On Home Depot

Credit Suisse likes the positioning of Home Depot HD over the next few years. HD combines internal margin drivers through major investments in distribution and remerchandising of the whole store, already strong results in a weak but likely to improve macro segment, a steady and predictable pricing environment and close to double digit free cash flow that the company has committed to mostly return to shareholders over time. Credit Suisse believes HD has significantly more upside margin potential than the 10% range they pointed to at their last analyst meeting. They will likely provide the roadmap to higher margins tomorrow. Credit Suisse is raising its estimate for 2011 to $2.25 from $2.10 to reflect margin opportunity and additional buybacks. Credit Suisse has an Outperform rating and $41 PT on HD HD closed Monday at $33.34