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Lowe’s: Analysts’ Recommendations before Its Earnings

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Analysts’ recommendations

Among the 32 analysts that follow Lowe’s Companies (LOW), 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 $118.17, which implies an upside potential of 8.8% from its stock price of $108.59.

On May 15, Oppenheimer raised its target price from $125 to $135. On April 15, Morgan Stanley raised its target price from $115 to $123. However, RBC cut its target price from $124 to $120 on May 7.

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Peer comparisons

Among the 34 analysts following 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 $206.38, which represents an upside potential of 7.3% from its stock price of $192.38.

Among the 25 analysts that cover Williams-Sonoma (WSM), 4.0% recommended a “buy,” 76% recommended a “hold,” and 20% recommended a “sell.” On average, analysts have given Williams-Sonoma a 12-month target price of $56.41, which represents a return potential of 5.0% from its stock price of $53.73.

Among the 22 analysts that follow Bed Bath & Beyond (BBBY), 9.1% recommended a “buy,” 72.7% recommended a “hold,” and 18.2% recommended a “sell.” On average, analysts have given Bed Bath & Beyond a 12-month target price of $17.87, which represents a return potential of 19.1% from its stock price of $15.0.

Valuation multiple

Investors are optimistic about Marvin Ellison’s turnaround initiatives. The initiatives have increased Lowe’s stock price and its valuation multiple since the beginning of this year. As of May 16, the company was trading at a forward PE ratio of 17.2x—compared to 15.5x at the beginning of the year. Home Depot, Williams-Sonoma, and Bed Bath & Beyond were trading at a forward PE ratios of 18.6x, 11.5x, and 7.5x, respectively, on May 16.

Lowe’s was trading at 17.9x analysts’ 2019 EPS estimate of $6.05 and at 15.5x analysts’ 2020 EPS estimate of $6.99.

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