On Wednesday, Truist Securities adjusted its price target for Lowe's (NYSE:LOW), a leading home improvement retailer, increasing it to $310 from the previous $307. The firm maintains a Buy rating on the stock.
The adjustment follows Lowe's third-quarter performance, which aligned with Truist Securities' recently revised forecasts. The results were bolstered by high-single-digit comparable sales in the professional contractor segment and approximately a 100 basis points lift from sales related to storm recovery efforts.
Despite observing a continued weakness in the sale of big-ticket discretionary items, Truist Securities remains optimistic about Lowe's prospects. The firm anticipates that the stability in the economy, coupled with the "golden handcuffs" of low existing mortgage rates, will prompt homeowners to engage in more home improvement projects. Homeowners have approximately $35 trillion in home equity, which is seen as potential "dry powder" for such activities.
"While higher tariffs/inflation could derail rate cut expectations, we think investors want housing-related exposure and we think LOW/Home Depot (HD, Buy) are among the best ways to play a potential surge in home-related spending," analysts at Truist said.
Lowe's Companies Inc (NYSE:LOW). reported robust third-quarter earnings, exceeding consensus estimates with an adjusted earnings per share (EPS) of $2.89. The company also updated its 2024 EPS guidance to a range of $11.80 to $11.90, aligning with current street estimates.
Following these results, several financial firms have adjusted their outlooks for Lowe's. For instance, Mizuho (NYSE:MFG) maintained an Outperform rating on Lowe's, slightly increasing the price target to $282 from $280.
Moreover, Piper Sandler confirmed its Overweight rating on Lowe's, with a steady price target of $307. RBC Capital Markets slightly increased its price target for Lowe's to $291. Wolfe Research raised its price target to $308, and UBS increased the stock's price target from $290 to $300, maintaining its Buy rating. However, DA Davidson trimmed the price target to $270, maintaining a Neutral rating.
InvestingPro Insights
Adding to Truist Securities' optimistic outlook on Lowe's, recent data from InvestingPro provides further context to the company's financial health and market position. Lowe's boasts a market capitalization of $147.08 billion, reflecting its significant presence in the Specialty Retail industry. The company's P/E ratio of 22.69 suggests a reasonable valuation relative to its earnings, especially considering its strong market position.
InvestingPro Tips highlight Lowe's commitment to shareholder returns, noting that the company has raised its dividend for 41 consecutive years and maintained dividend payments for 54 years. This track record aligns with Truist Securities' view of Lowe's as a solid investment in the home improvement sector. Additionally, Lowe's operates with a moderate level of debt, which could provide financial flexibility as it navigates market fluctuations and potential economic shifts mentioned in the article.
The company's profitability over the last twelve months and analysts' predictions of continued profitability this year support Truist Securities' positive stance. Moreover, Lowe's high return over the last decade and strong return over the last five years underscore its consistent performance, which could be attractive to investors looking for stability in the housing-related market.
For readers interested in a deeper analysis, InvestingPro offers 7 additional tips that could provide further insights into Lowe's financial outlook and market position.
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