Sector Snap: Home improvement comps to decline

Scot Ciccarelli, who initiated coverage of the two companies, told investors in a research note Tuesday that the nation's economic woes will continue to weigh on both companies.

But he said he expects Mooresville, N.C.-based Lowe's to fare slightly better, calling the retailer "one of the main plays for an eventual turnaround in the housing market."

Ciccarelli said the company's same-store sales will likely be negative for at least the next four quarters, but the decline should lessen in the first half of 2009.

Ciccarelli said Atlanta-based Home Depot's same-store sales will follow a similar pattern.

"Given the magnitude of the company's turnaround efforts, we suspect that investors will maintain a 'prove it to me' attitude toward Home Depot shares," Ciccarelli wrote.

Lowe's shares fell 78 cents or 3.8 percent to $19.92 in afternoon trading Tuesday, while Home Depot shares fell 60 cents, or 2.6 percent, to $22.22.