Home Depot Unit Could Go for $1 Billion Less

Editor's Note: In this feature from Stockpickr, we highlight lists of stocks that have been upgraded by analysts or are experiencing activist situations or some other market moving events.

Rumors of the Day: Several reports say Home Depot(HD) will accept about $1.2 billion less than it originally expected in the sale of its wholesale distribution business to three private-equity groups. The Wall Street Journal reported the deal may not close before the Thursday deadline, as the three major banks -- JPMorgan, Lehman Bros. and Merrill Lynch -- are balking over the financing. Home Depot shares are gaining 51 cents at $34.53.

Today's Hot List: Gap(GPS) reported second-quarter adjusted earnings of 21 cents a share, 2 cents better than estimates. Revenues were $3.69 billion vs. the $3.73 billion consensus. Due to a 53rd week in fiscal year 2006, second-quarter 2007 comparable store sales are compared with the thirteen weeks ended August 5, 2006. On this basis, comparable store sales decreased 5%, compared with a decrease of 5% as reported for the second quarter of 2006. The company's online sales for the second quarter increased 26% to $172 million, compared with $136 million for the second quarter of last year. The stock surged $1 to $18.40.

Analyst Downgrades: Goldman Sachs said it is downgrading AmeriCredit(ACF) to sell from neutral due to difficult and increasingly expensive access to funding. Goldman sees potential for EPS shortfalls if the company is forced to slow origination growth in light of the weak environment. The firm also lowered its price target to $17 from $21. Shares slipped 97 cents to $17.13.

Analyst Upgrades: Suntrust Robinson Humphrey upgraded Apollo Group(APOL) to buy from neutral. The company noted enrollment trends should improve over the coming quarters, driven by the Axia business. They awarded the company with a $72 price target. Apollo is trading up $1.05 to $58.80.

Latest Activist Situations: In a regulatory filing on LookSmart(LOOK), Sidus Investment Management noted it had changed its filing status from 13G "passive" to 13D "active." In a pretty standard disclosure, Sidus, which holds 10.3% of LookSmart, did not make any direct requests of the company. The firm said it reserves the right to discuss various views and opinions with members of the company's senior management. The stock gained 4 cents at $2.67.

>To order reprints of this article, click here: Reprints