Despite the recently reported breach in online security and the hit that its share price took, Home Depot Inc. (NYSE: HD) is likely not as bad off as many investors might think. This is according to a research report by Oppenheimer’s Brian Nagel. His take is positive for both Home Depot and Lowe’s Companies Inc. (NYSE: LOW), but Nagel went on to use last year’s disaster at Target Corp. (NYSE: TGT) for its recent hack as a reference.

Since mid-May, Home Depot was up 18% and Lowe’s was up 20%, compared to only 7% in the S&P 500. 24/7 Wall St. also recently gave an assessment that the relative situation for Home Depot was just not likely anywhere as bad as for Target after viewing the actual market response to news of the breach.

On a relative basis to Target, Nagel compared the Home Depot breach and considers any further breach-related weakness in Home Depot shares as a near-term buying opportunity. He had this to say about the Home Depot breach:

Earlier this week various news services reported that over the past few months Home Depot might have fallen victim to a potential breach of credit and debit cards used at its stores. Data regarding this potential security issue has been limited thus far. HD has been unable to confirm that any breach actually occurred. News of potential credit and debit card issues has weighed somewhat on HD shares. Since the close of trading on Aug. 29th (the trading day prior to news of a potential security breach at Home Depot), shares of HD are down about 3% and underperforming a gain of about 4% in our Opco Hardlines coverage (ex. HD and LOW) and a flattish showing in the S&P 500.

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Nagel went on to make points for Home Depot relative to Target:

• Home Depot has already been aggressive and tactful in reaching out to consumers to highlight the potential credit and debit card breach and offer support if needed in the form of charge reimbursement and credit report monitoring;
• Consumers are likely turning hardened to news of credit and debit card breaches following several such incidents over the past few years;
• Target shares rebounded quickly after initially declining more than 10% on news of a security breach at the chain;
• Most commentary in the news is positioning a potential issue at Home Depot as more of a problem for retailers and banks broadly than simply a shortfall at Home Depot; and
• Given the increased pervasiveness of credit and debit card-related security issues, we expect investors to view any incremental expenses or sales disruptions at Home Depot as one-time in nature and not factor them into their assessments of the underlying earnings per share power of the chain.

Nagel concluded that, “While shares might lack a near-term ‘investable event,’ they should continue to grind higher through at least early 2015 on improving fundamentals, sector-leading earnings growth and potential EPS upside, and still-accommodative valuations.”

Oppenheimer reiterated its Outperform ratings on shares of Home Depot and Lowes. It also issued a new target price of $101, up from $93, for Home Depot with an earnings per share forecast of $5.30 in the 2015 fiscal year. Thomson Reuters has a price target of $95.62 and an estimate of $5.21 earnings per share for the 2015 fiscal year.

Oppenheimer set its new Lowe’s price target at $60, which was up from $57. It also gave an estimate of $3.15 in earnings per share for the 2015 fiscal year. Thomson Reuters has a price target of $54.83 and an estimate of $3.15 in earnings per share for the 2015 fiscal year.

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