The Home Depot Inc., the largest U.S. home improvement retailer, will face tougher sales and margin comparisons in the next two quarters, an analyst said Tuesday as he cut his rating on the stock.

Goldman Sachs analyst Matthew Fassler cut his rating on the Atlanta-based company to "Neutral" from "Buy." He said he is becoming increasingly selective in the sector, which depends heavily on the health of the housing market.

"Housing data remains soft, and while we have noted a diminished correlation between sector sales and housing turns, leading indicators are subdued," he wrote in a client note.

He said the company's turnaround is still under way, with improving merchandising systems, but it is going to be cycling past tough comparisons to the prior year. He trimmed his full-year earnings per share estimate by a penny to $1.90 on lower sales.

On average, analysts expect the company to earn $1.91 per share this year, according to Thomson Reuters.

Shares of Home Depot rose 6 cents to $31.73 in midday trading Tuesday. Shares have ranged from $24.47 to $37.03 in the past 52 weeks.