Shares of the home improvement retailer Home Depot (HD) - Get Home Depot, Inc. (HD) Report were rising 1.8% during midday trading Wednesday following an upgrade of its stock at Raymond James to "Outperform" from "Market Perform" with a $165 price target.

The firm's upgrade is predicated on "impressive" quarterly results combined with positive commentary regarding management's execution.

Despite a second quarter beat from Home Depot and a boost in its outlook, the stock fell as investors remain skeptical that the continued economic recovery is sustainable. But, Raymond James analyst Budd Bugatch says these concerns are overblown.

"Underlying industry indicators, as well as comments form key industry suppliers, remain positive," Bugatch wrote in a note to clients.

TheStreet Recommends

"Positive trends in housing turnover, housing starts, overall home affordability and the emergence of first-time homebuyers (typically owners of older homes) during the second quarter all point to an ongoing favorable domestic housing environment."

Read TheStreet's interview with Home Depot CFO Carole Tome here

Don't miss these top stories on TheStreet:

Editors' pick: Originally published Aug. 16.