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Investing.com - Morgan Stanley (NYSE:MS) has raised its price target on Lowe’s (NYSE:LOW) to $270.00 from $255.00 while maintaining an Overweight rating on the home improvement retailer’s stock. Currently trading at $257.14, the $144.49 billion market cap company has shown strong momentum, though InvestingPro data indicates the stock is currently in overbought territory.
The investment firm’s updated outlook follows Lowe’s second-quarter 2025 results and the company’s announced acquisition of FBM, with Morgan Stanley noting a positive risk/reward profile offering approximately 30% upside potential to its bull case. The company maintains a "GOOD" overall financial health score according to InvestingPro analysis, with a notable track record of raising dividends for 41 consecutive years.
For fiscal year 2025, Morgan Stanley is modeling near the midpoint of Lowe’s guidance, projecting 0.5% comparable sales growth, approximately 15 basis points of gross margin expansion, and roughly 20 basis points of SG&A deleverage, resulting in an estimated 12.25% EBIT margin and earnings per share of about $12.25.
Looking ahead to fiscal years 2026 and 2027, the firm forecasts comparable sales growth of 2% and 3% respectively, with EBIT margins expanding to approximately 12.5% and 12.9%, driven by slight gross margin expansion and roughly 30 basis points of SG&A leverage each year.
Morgan Stanley expects Lowe’s to pause share buybacks until the second half of 2027 due to the proposed FBM acquisition, projecting earnings per share of approximately $12.98 in 2026 and $14.10 in 2027, with the new price target based on roughly 19 times estimated 2027 earnings. Currently trading at a P/E of 21.36x, analyst targets range from $207 to $300. Discover more detailed valuation metrics and 8 additional key insights with InvestingPro’s comprehensive research report.
In other recent news, Lowe’s Companies Inc. reported its second-quarter 2025 earnings, exceeding analysts’ expectations with adjusted earnings per share of $4.33 compared to the forecast of $4.24. Revenue for the quarter aligned with predictions, reaching $23.96 billion. Truist Securities responded by raising its price target for Lowe’s stock to $283 from $264, maintaining a Buy rating due to solid quarterly results. The firm noted that Lowe’s sales and comparable store sales met expectations, with a notable improvement in margins. Comparable sales improved from a 1% decline in May to a 4.7% increase in July. Truist Securities also reiterated its Buy rating, highlighting the company’s margin strength as a key factor in exceeding earnings forecasts. Additionally, Lowe’s provided steady full-year guidance, reinforcing its position in the home improvement market. These developments reflect a positive outlook from analysts and steady performance in recent quarters.
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