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On Thursday, RBC Capital Markets adjusted its outlook for Lowe’s Companies Inc. (NYSE: NYSE:LOW), reducing the home improvement retailer’s price target from $292.00 to $285.00. Despite the adjustment, the firm maintained its Sector Perform rating on the stock. With a current market capitalization of $138.5 billion and trading at $246.60, InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value.
The revision came after Lowe’s reported its fourth-quarter results and provided guidance that met analysts’ expectations. RBC Capital’s analyst cited weather as a plausible reason for the softer first-quarter guidance, noting that it could lead to a back-loaded earnings per share (EPS) growth in the second half of the year. InvestingPro data reveals that six analysts have recently revised their earnings estimates downward, while the company maintains strong fundamentals with $83.7 billion in revenue over the last twelve months.
Lowe’s first-quarter performance is anticipated to align with the company’s guidance, with RBC Capital maintaining its -2% comparable sales estimate. However, the firm has revised its adjusted EPS forecast downward to $2.91 from the previous estimate of $3.11, reflecting a potential sales deleverage. This adjustment assumes an operating margin of approximately 11.9%, slightly above the company’s guidance of around 11.8%.
Looking ahead to the fiscal years 2025 and 2026, RBC Capital has modified its projections for Lowe’s comparable sales growth to 0.6% and 3.6%, respectively. This is a slight decrease from the prior estimates of 0.1% and 4.5%. Correspondingly, the adjusted EPS forecasts for the same years have been lowered to $12.29 and $13.57, down from the earlier predictions of $12.44 and $13.93.
The new price target of $285 is based on approximately 21 times RBC Capital’s revised 2026 adjusted EPS estimate of $13.57, compared to the current P/E ratio of 20.4x. The analyst concluded by acknowledging the positive skew in risk to reward for Lowe’s stock but also highlighted that any upside is contingent on a turnaround in the category, the timing of which remains uncertain. For deeper insights into Lowe’s valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis including 8 additional ProTips and the detailed Pro Research Report, which transforms complex Wall Street data into actionable intelligence.
In other recent news, Lowe’s Companies Inc. reported a strong fourth-quarter performance, surpassing expectations and providing a solid forecast for fiscal year 2025. Despite this robust performance, Lowe’s guidance for 2025 fell below market expectations, with factors such as reduced benefits from hurricane recovery efforts and a slow start to the year due to weather conditions impacting projections. Analysts from Piper Sandler, Loop Capital, and Mizuho (NYSE:MFG) have adjusted their price targets for Lowe’s, citing various market influences and maintaining Overweight, Buy, and Outperform ratings, respectively.
Lowe’s comparable store sales saw a modest increase of 0.2%, driven by the professional customer segment and online sales, though the DIY segment continues to face challenges. Cowen analysts maintained a Hold rating with a $270 price target, emphasizing the company’s potential growth in the professional contractor segment. KeyBanc also acknowledged Lowe’s strong fourth-quarter results but expressed caution due to broader economic factors that might limit short-term stock appreciation.
Mizuho noted a decline in first-quarter comparable sales, influenced by colder weather, but anticipates a rebound in the second quarter. Loop Capital adjusted its earnings estimates slightly below consensus, citing potential weather impacts on first-quarter sales. Despite these mixed signals, analysts remain optimistic about Lowe’s long-term growth trajectory, particularly with its strategic investments and initiatives aimed at professional customers.
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