RBC Capital analysts initiated shares of Lowe's Cos. (NYSE:LOW) and Home Depot (NYSE:HD) with Sector Perform ratings in separate notes to clients Tuesday.
The investment bank assigned LOW a $194 price target, stating that while the company's under-penetration in Pro is a meaningful share gain/margin opportunity over the long term, it is likely to result in underperformance compared to peers in the near term as the consumer backdrop worsens.
"At ~14.1x the stock seems to embed some of this risk, but we believe '24 expectations need to be reset and some degree of clarity on the trajectory of rates is needed for shares to work," the analysts wrote.
Home Depot was assigned a $303 price target, with RBC stating that while there are lots of reasons they like the story over the long term, they're of the view that various macro factors, including high rates, persistent inflation, and the shift from goods to services, skew near-term earnings risk to the downside.
"We believe increased clarity around the trajectory of rates is needed to get more constructive," said analysts at RBC.