KeyBanc has upgraded Lowe’s (LOW, Financial) stock to 'Overweight' from 'Sector Weight' with a price target of $266, highlighting what it sees as a promising opportunity for long-term investors. The upgrade comes on the heels of a recent decline in Lowe’s share price, which the firm believes presents a chance to acquire shares in a high-caliber company poised for substantial growth over the next few years.
The analysis suggests that Lowe’s is well-prepared to manage immediate challenges, including the implications of recent tariff implementations. KeyBanc also points out that Lowe’s is likely to benefit from changes in tax policies, as well as a projected recovery in the housing market and an increase in home-related expenditure.
Investors are encouraged to consider strengthening their positions in Lowe's, as the company's strategic advantages may offer significant returns over a two- to three-year period.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 32 analysts, the average target price for Lowe's Companies Inc (LOW, Financial) is $276.23 with a high estimate of $305.00 and a low estimate of $217.00. The average target implies an upside of 24.40% from the current price of $222.05. More detailed estimate data can be found on the Lowe's Companies Inc (LOW) Forecast page.
Based on the consensus recommendation from 38 brokerage firms, Lowe's Companies Inc's (LOW, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Lowe's Companies Inc (LOW, Financial) in one year is $219.53, suggesting a downside of 1.13% from the current price of $222.05. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Lowe's Companies Inc (LOW) Summary page.
LOW Key Business Developments
Release Date: February 26, 2025
- Fourth Quarter Sales: $18.6 billion.
- Full Year 2024 Sales: $83.7 billion.
- Comparable Sales Growth: 0.2% in Q4.
- Adjusted Operating Margin: 12.3% for the full year.
- Adjusted Earnings Per Share: $11.99 for the full year.
- Pro Sales Growth: High single-digit comps in Q4.
- Online Sales Growth: 9.5% in Q4.
- Gross Margin: 32.9% in Q4, up 46 basis points from last year.
- Free Cash Flow: $7.7 billion in 2024.
- Shareholder Returns: $6.5 billion through share repurchases and dividends in 2024.
- Capital Expenditures: $548 million in Q4.
- Adjusted Debt to EBITDAR: 3.01 times at year-end.
- Return on Invested Capital: 32% for the year.
- 2025 Sales Outlook: $83.5 billion to $84.5 billion.
- 2025 Comparable Sales Outlook: Flat to up 1%.
- 2025 Operating Margin Outlook: 12.3% to 12.4%.
- 2025 Capital Expenditures Outlook: Approximately $2.5 billion.
- New Store Openings in 2025: 5 to 10 new stores planned.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lowe's Companies Inc (LOW, Financial) reported strong fourth-quarter sales of $18.6 billion, with positive comparable sales of 0.2%, exceeding expectations.
- The company saw high single-digit growth in its Pro segment for the second consecutive quarter, driven by a transformed Pro offering and enhanced digital experiences.
- Online sales grew by 9.5% in Q4, with record-breaking sales during Black Friday and Cyber Monday, indicating successful omnichannel investments.
- Lowe's Companies Inc (LOW) launched a redesigned Pro loyalty program, MyLowe's Pro Rewards, to drive greater engagement with small to medium Pro customers.
- The company is leveraging emerging technology, such as AI-powered virtual advisors, to enhance customer experience and streamline project recommendations.
Negative Points
- Lowe's Companies Inc (LOW) is facing continued near-term pressure on DIY discretionary spending, particularly in larger ticket projects.
- The challenging home improvement market is impacted by high mortgage rates, leading to a lock-in effect and the lowest pace of existing home sales in nearly 30 years.
- Comparable transactions declined by 1.3% in Q4, with DIY discretionary pressure persisting, especially in larger ticket interior projects.
- The company anticipates a flat home improvement market in 2025, with ongoing uncertainty around the timing of an inflection in demand.
- Lowe's Companies Inc (LOW) expects first-quarter operating margin to be approximately 50 basis points below the full-year guide due to sales deleverage and prioritization of strategic investments.
