Home Depot Inc raised its 2009 profit forecast and stood by its sales expectations on Wednesday ahead of a meeting with analysts and investors, sending its shares up nearly 4 percent.

The world's largest home improvement retailer, which has been grappling with the economic downturn and a depressed housing market, expects 2009 earnings per share from continuing operations to be flat to down 7 percent from last year, compared with its previous forecast of a 7 percent decline.

Based on a 2008 profit of $1.37 per share,, that means of a forecast of $1.27 to $1.37, compared with the average Wall Street estimate of $1.33

On an adjusted basis, it expects earnings per share from continuing operations to fall by 20 percent to 26 percent, compared with its previous forecast of a 26 percent decline. That yields a forecast of $1.32 to $1.42 a share, compared with the Reuters estimate of $1.41 and last year's profit of $1.78.

Home Depot still expects sales to fall by about 9 percent this year, with sales at stores open at least a year down in a high-single digit range. It expects gross margins to be flat to slightly higher.

The company said it should be able to achieve an operating margin of about 10 percent and a return on invested capital of about 15 percent over the long term, helped by improvements in customer service, products, productivity and efficiency and a revival in the home improvement market.

It did not provide a time frame for that long-term operating target.

Home Depot has been upgrading service and products in its stores to win back market share from rival Lowe's Cos Inc .

Earlier this year, Home Depot announced plans to freeze officers' salaries and close certain specialty outlets to save money in the recession and prolonged U.S. housing slump.

The Atlanta-based company, which shed about 7,000 jobs earlier this year, cut operating expenses 16.4 percent in the first quarter, which ended on May 3.

Shares of Home Depot jumped to $25.29 in pre-market trading after closing at $24.35 on Tuesday. Lowe's shares had not traded.

(Reporting by Jessica Wohl; Editing by Derek Caney)