Shares of Lowe's Companies Inc
The pressure on the share of wallet for goods seem to be subsiding, with a resumption in wage growth, according to JPMorgan analyst Christopher Horvers.
The Lowe's Companies Analyst: Horvers upgraded the rating for Lowe's Companies from Neutral to Overweight, while raising the price target from $210 to $265.
The Lowe's Companies Thesis: The home improvement category is estimated to be less than 5% from the pre-COVID wallet share, Horvers said in the upgrade note.
"Moreover, LOW's largest category appliances (13.9% of sales) is further along in the deflation process," the analyst wrote. A "better spring after two poor weather periods could lead to a faster than expected comp recovery" in Lowe's outdoor garden center, he added.
The Federal Reserve's expected rate cuts could also spur growth. "While we continue to think that the rebound will be partly muted by the locked-in mortgage rate dynamic, the sheer potential magnitude of such a recovery suggests a strong acceleration in trends against arguably low consensus expectations," Horvers further stated.
Lowe's has been added to JPMorgan's Analyst Focus List "as a Value stock idea," he said.
LOW Price Action: Shares of Lowe's Companies declined by 2.3% to $224.57 at the time of publication on Tuesday.
