Lowe’s on the Street: Analyst View ahead of the 2Q17 Earnings
On August 17, 2017, Lowe’s Companies (LOW) stock was trading at $74.12. The stock price might have been incorporated into the analysts’ estimates that we discussed in our earlier articles. In this article, we’ll look at the analysts’ 12-month target prices as well as their recommendations.
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The entry of Amazon into the appliances sector by agreeing to sell the Kenmore appliances of Sears Holdings (SHLD) through its website appears to have compelled analysts to lower their 12-month target prices. As of August 17, 2017, analysts were expecting Lowe’s stock price to reach $88.69 in the next 12-months, which represents a return potential of 19.7% from its current level.
The target prices and return potentials of Lowe’s peers are as follows:
- Home Depot (HD): $171.15, with a return potential of 14.4%
- Bed Bath & Beyond (BBBY): $32.32, with a return potential of 17.6%
- Williams-Sonoma (WSM): $52.45, with a potential return of 17.9%
Of the 30 analysts tracking Lowe’s, 56.7% are recommending a “buy,” while 40% are recommending a “hold,” and the remaining 3.3% are recommending a “sell” for the stock. On August 14, 2017, Longbow Research reiterated its “buy” rating on LOW, with a target price of $95.
Speaking to StreetInsider.com, David MacGregor, an analyst at Longbow, stated: “Our 2Q EPS forecast of $1.62 is also in line with consensus and is based on expectations of 4.4% comp store sales growth (versus consensus 4.4%). Our total revenue growth of 7.4% is slightly ahead of consensus 7.0% largely we believe due to our non-comp growth of 3.0% on new stores.”
Lowe’s stock price is now lower than the analysts’ 12-month target price. However, this does not mean an automatic “buy.” Investors have to carefully analyze the various parameters discussed here before making investment decisions.