Benzinga | Jul 31, 2020 02:59PM EDT

Why BofA Is Turning Bullish On Retailer At Home

BofA Securities upgraded At Home Group Inc (NYSE:HOME) from Underperform to Buy and raised price target from $5 to $16.

Analyst Curtis Nagle said there is sustainability in home-related trends and listed the following as reasons for the upgrade:

* At Home is going beyond industry sales expectations

* Leverage will be lower after the second quarter

* At Home's valuation is more attractive with the new estimates in store

* At Home reported Q2 results with an EBITDA that slightly topped the earnings from FY19

"We believe a higher multiple is warranted on higher confidence on sales/ EPS growth through the next 2-3yrs," the analyst said.

Nagle named the following investment takeaways on the stock:

* People are spending more towards their homes and away from travel and entertainment.

* At Home stores are staying stable, even in states with high virus counts.

* Lastly, At Home is using cash made in the second quarter to pay off $228 million in short-term debt.

BofA raised its 2021 EPS estimate from 8 cents to $1.43.

HOME Price Action: The stock was down 2.78% at $12.25 at last check Friday.

Public domain photo via Wikimedia.