Home Depot in the Green on Analyst Upgrade

Surprisingly, Home Depot(HD Quote) is expected to post better-than-expected profits in 2009, as consumers look to spruce up their homes instead of selling.

The home improvement retailer was one of the few in the retail sector in the green on Wednesday, after an analyst at Citigroup upgraded the company to buy from hold.

The news comes amid a report by the Commerce Department saying April sales fell .4%, worse than analysts' estimates.

But the home improvement sector actually experienced the most improvement and should benefit in May from easier comparisons.

Analyst Deborah Weinswig raised her target on the company's stock to $32 from $26. Home merchandise has seen an uptick at retailers like JC Penney(JCP Quote) and Kohl's(KSS Quote), she said.

Some housing markets, like California and Florida, are seeing signs of a rebound, and an easing of credit and low mortgage rates are positive for the company's sales, Weinswig said.

Christopher Hovers, analyst at JP Morgan, wrote in a note, "we expect relative strength out of the home improvement segment as categories that have worked (outdoor and maintenance) become seasonally stronger, and the group is cycling three years of negative comparisons."

Shares of Home Depot were up 1.1% to $24.91, while rival Lowe's(LOW Quote) dropped 1.1% to $19.03.