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Investing.com - DA Davidson raised its price target on Lowe’s (NYSE:LOW) to $266 from $240 while maintaining a Neutral rating on the home improvement retailer’s stock. The new target sits between the current analyst range of $221 to $300, with the stock currently trading at $257.14. According to InvestingPro analysis, Lowe’s appears slightly overvalued at current levels.
The research firm cited Lowe’s comparable sales improvement and second-half guidance that exceeded consensus expectations. DA Davidson also noted the company’s recently announced acquisition of FBM (Foundation Building Materials (NYSE:FBM)). With a market capitalization of $144.5 billion and a strong financial health score rated as "GOOD" by InvestingPro, Lowe’s maintains a solid foundation for expansion.
The analyst team created an M&A template with estimated accretion calculations both with and without synergies for the FBM acquisition. They also examined comparable takeout multiples in the building materials sector, which they described as "being rolled up as M&A activity heats up in the space."
DA Davidson’s new price target represents a multiple of 20 times their estimated 2026 earnings per share for Lowe’s. The firm provided additional insights on core business trends following their earnings call and callback.
The price target increase follows what DA Davidson called "lots of surprises" in Lowe’s earnings report, though the firm maintained its Neutral stance on the stock despite the higher valuation.
In other recent news, Lowe’s has seen several updates following its second-quarter results and strategic decisions. The company reported sales and comparable store sales in line with expectations, with margins slightly higher than anticipated, according to Truist Securities. This performance led to Truist Securities raising its price target for Lowe’s to $283, maintaining a Buy rating. UBS also increased its price target to $325, highlighting improvements in Lowe’s DIY segment and share-gaining comparable sales growth. Additionally, Morgan Stanley (NYSE:MS) raised its price target to $270, maintaining an Overweight rating, following Lowe’s announcement of a nearly $9 billion acquisition of Foundation Building Materials (FBM). This acquisition positions Lowe’s favorably in the wallboard distribution sector, as noted by William Blair, which observed increased merger and acquisition activity in the industry. Meanwhile, Truist Securities reiterated its Buy rating on Lowe’s, emphasizing the company’s strong margins and better-than-expected earnings. These developments reflect a positive outlook from several investment firms regarding Lowe’s recent performance and strategic moves.
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