UPDATE: Goldman Sachs Initiates HD Supply at Neutral on Multiple Positive Factors

In a report published Tuesday, Goldman Sachs analyst Joe Ritchie initiates coverage on HD Supply (NASDAQ: HDS) with a Neutral rating and $23.00 price target.

In the report, Goldman Sachs noted, “We initiate coverage of HD Supply with a Neutral rating and a 12-month price target of $23, implying 0% upside. Three key points underpin our Neutral rating. We believe HDS is well positioned to benefit from a cyclical uplift in resi/non-res construction, which should help drive industry-leading growth over the next three years. However, given that we expect about half of HDS's top-line/EBITDA growth to come from internal initiatives, we are wary of potential execution risk. Lastly, we believe HDS is fairly valued. Our price target is based on SOTP analysis and valuation of HDS' net operating losses (NOLs) at $2-$3/share.”

HD Supply closed on Monday at $23.00.