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On Thursday, Telsey Advisory Group maintained its optimistic stance on Lowe’s Companies Inc. (NYSE: NYSE:LOW), currently trading at $246.68, reiterating an Outperform rating with a steady price target of $305.00. According to InvestingPro data, analyst targets for Lowe’s range from $216 to $316, with 13 analysts recently revising their earnings estimates upward for the upcoming period. The firm’s analysis indicates that despite anticipating a softer fourth quarter in 2024 due to ongoing economic pressures, there are expectations for a rebound in 2025. Telsey’s commentary highlighted the challenges faced by the consumer, such as high inflation, increased interest rates, and a pivot towards services, which are likely to affect Lowe’s comparative sales in the near term. The company is also up against tough year-over-year comparisons from a period of intense home-related spending during the pandemic.
Lowe’s has reported varied comparative sales over the past years, including increases and decreases, with the most recent figures showing a decline in the fourth quarter of 2023. The company maintains strong fundamentals, generating $83.7 billion in revenue over the last twelve months, with a healthy gross profit margin of 33.2%. As a InvestingPro subscriber, you’d have access to over 30 additional financial metrics and insights about Lowe’s performance, including exclusive Fair Value calculations that suggest the stock may be currently overvalued. However, Telsey foresees a recovery starting in 2025 as the comparisons become more favorable and the housing market gains momentum. This optimism is supported by the latest TAG Housing Scorecard, which suggests a positive outlook due to factors such as employment and wage growth, the long-term benefits of homeownership, and a rise in housing inventory.
The housing market’s recent performance adds to the positive outlook, with the National Association of Realtors (NAR) reporting a 6.0% year-over-year increase in the median sales price for existing homes in December 2024. As a prominent player in the Specialty Retail industry, Lowe’s has demonstrated its commitment to shareholder returns by maintaining dividend payments for 55 consecutive years, with a current dividend yield of 1.86%. InvestingPro research reveals that Lowe’s has raised its dividend for 41 consecutive years, showcasing its financial stability and long-term value creation potential. Moreover, existing home sales have shown an upward trend in the final months of 2024, reversing a long period of decline. Telsey expects these housing market tailwinds to eventually translate into increased demand for home improvement, projecting a return to positive comparative sales for Lowe’s in the first half of 2025.
In other recent news, Lowe’s Companies Inc. has seen several updates from financial analysts. Truist Securities has adjusted its price target for Lowe’s to $308, maintaining a Buy rating and revising its earnings estimates for the coming years. The firm anticipates a comparable sales gain of approximately 1% for 2025, with an EPS range of $12.30 to $12.60. Similarly, Bernstein increased its price target to $294, maintaining an Outperform rating, while RBC Capital Markets slightly adjusted its target to $292, holding a Sector Perform rating.
Lowe’s has confirmed its 2024 guidance and outlined projections for 2025, including plans to open 10 to 15 new stores annually and achieve $1 billion in productivity savings by 2025. The company’s strategic initiatives, such as enhancing merchandising and improving supply chain efficiency, are expected to support its market position. Analysts from Piper Sandler have also noted Lowe’s potential benefit from anticipated shifts in consumer purchasing behavior. Despite varied price targets, the consensus among analysts suggests a positive outlook for Lowe’s as it positions itself for future growth.
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