UPDATE: J.P. Morgan Initiates HD Supply at Overweight on Favorable Risk/Reward Around Premium Growth

In a report published on Tuesday, J.P. Morgan analyst C. Stephen Tusa initiated coverage on HD Supply (NASDAQ: HDS) with an Overweight rating and a $27 price target.

In the report, J.P. Morgan stated, "While unproven relative to the bellwethers like GWW/FAST, heavy investment in resources to drive growth combine with end market tailwinds and point to an above-average ~20% EBITDA CAGR, and potential to transition to a premium multiple organic growth/ROIC story. Leverage creates a higher hurdle for an OW, but we also see enough upside to compensate, and with momentum in initiatives we think the risk/reward of potential outcomes is attractive."

HD Supply closed on Monday at $23.00.