After Lowe’s Companies (LOW) reported its first-quarter earnings, several analysts lowered their target prices. The weak first-quarter EPS and lower EPS guidance by the company’s management appear to have prompted analysts to lower their target prices.
- SunTrust Robinson from $128 to $120
- UBS from $125 to $115
- Baird from $133 to $127
- Wedbush from $110 to $105
- Citigroup from $127 to $115
- RBC from $120 to $110
- Raymond James from $120 to $115
- Telsey Advisory Group from $126 to $116
- Jefferies from $126 to $117
Despite the lower-than-expected first-quarter EPS, analysts continue to favor a “buy” rating for Lowe’s. Among the 32 analysts that are covering Lowe’s, 68.8% recommended a “buy,” while 31.2% recommended a “hold.” None of the analysts recommended a “sell.” On average, analysts have given Lowe’s a 12-month target price of $114.21, which represents an upside potential of 19.8% from its stock price of $95.37 on May 24.
Among the 34 analysts that follow Home Depot (HD), 67.6% recommended a “buy,” while 32.4% recommended a “hold.” On average, analysts have given Home Depot a 12-month target price of $206.90, which represents a return potential of 6.9% from its stock price of $193.59.
The decline in Lowe’s stock price has also brought its valuation multiple down. As of May 24, the company was trading at a forward PE ratio of 16.0x compared to 17.5x before the announcement of its first-quarter earnings. On the same day, Home Depot was trading at a forward PE ratio of 18.6x.
On May 24, Lowe’s was trading at 17.1x analysts’ 2019 EPS estimate of $5.58 and at 14.3x analysts 2020 EPS estimate of $6.65. The company’s EPS is expected to rise 9.4% in 2019 and 19.2% in 2020.