On Thursday, Bernstein SocGen Group exhibited confidence in Lowe's Companies Inc. (NYSE: NYSE:LOW), as the firm increased the home improvement retailer's price target to $304 from $301. The Outperform rating was also reaffirmed, reflecting optimism about the company's future performance.
According to InvestingPro data, Lowe's, with its substantial market capitalization of $151.35 billion, has demonstrated remarkable strength with a 30.8% return over the past year. The company has maintained its position as a prominent player in the Specialty Retail industry, having raised its dividend for 41 consecutive years.
The analyst from Bernstein SocGen Group highlighted Lowe's management's commitment to investing in the business amidst a period of waiting for a turnaround in macro demand. The company has heightened its cost savings goal to $1 billion annually, which is anticipated to be equally divided between the cost of goods sold (COGS) and operating expenses (OpEx).
These savings are expected to balance the need for increased investment. The company's financial health appears solid, with InvestingPro analysis showing a healthy current ratio of 1.13 and strong profitability metrics.
Lowe's management has adjusted its EBIT margin goal of 14.5%, which was originally set to be achieved sooner, to now be expected in fiscal year 2026 when the housing market is predicted to recover. The company has provided guidance for fiscal year 2025, anticipating net sales to be between $82 billion and $87 billion, with an adjusted EBIT margin ranging from 12.0% to 12.7%, and return on invested capital (ROIC) between 28% and 32%. Beyond 2025, Lowe's aims to surpass the broader relevant market by 100 basis points in sales performance.
For the period following 2026, when a rise in macro demand is expected, management projects sales comparable growth of 3%-5%, an annual operating margin increase of 30-50 basis points, and an annual ROIC increase of 50-100 basis points, in addition to maintaining the goal of outperforming the market by 100 basis points in sales.
The analyst noted that the muted response of Lowe's stock price reflects its strong ties to macroeconomic factors. With potential tariffs likely to intensify inflationary pressures and postpone interest rate cuts, a significant change in the company's performance is not anticipated for the following year. Despite these challenges, Bernstein SocGen Group believes that Lowe's is in a solid position to benefit from a rebound in macro demand when it occurs.
While current analyst consensus shows mixed sentiment with a rating of 2.11, detailed analysis and additional insights are available through InvestingPro's comprehensive research reports, which provide in-depth coverage of Lowe's and over 1,400 other top US stocks.
In other recent news, Lowe's Companies Inc. has been the focus of several recent developments.
The home improvement retailer reaffirmed its full-year 2024 outlook, projecting total sales between $83.0 and $83.5 billion. As part of its 2025 Total (EPA:TTEF) Home Strategy, Lowe's announced plans to launch the first product marketplace in the U.S. home improvement industry and relaunch its Pro loyalty program.
KeyBanc Capital Markets maintained its Sector Weight rating on Lowe's, acknowledging the company's strong market position and potential for recovery. However, the firm also noted risks associated with elevated interest rates and valuation concerns. Analysts at Evercore ISI and Jefferies raised their target for Lowe's to $290 and $316 respectively, reflecting anticipated recovery in earnings by 2026. Piper Sandler maintains an Overweight rating on the company, setting a price target at $307.
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