UBS Maintains a 'Buy' on Lowe's (LOW): Long-Term Gain, Short-Term Pain?

UBS maintains a 'Buy' on Lowe's (NYSE: LOW), price target lowered $1 to $25.

UBS analyst says, "Despite a difficult sales result (including a -0.3% comp decline vs. our flat est and the consensus est of 1.2%), Lowe’s was able to achieve a decent profitability outcome for the quarter with EPS of $0.68 (ex. charges), which was ahead of our (and the consensus) estimate of $0.66."

"Several near-term factors should support the stock - We think there are several appealing factors for LOW’s near-term investment case: The company has set a lower bar for 2H’11 by guiding to flat comps (note that comps are running positive QTD). Also, we expect LOW should see less of a drag from soft appliance trends. This caused a ~50 bps comp drag in 2Q’11. Lastly, we believe Lowe’s should continue to generate strong expense leverage (2Q’11 op margin expanded 34 bps)."

For more ratings news on Lowe's click here and for the rating history of Lowe's click here.

Shares of Lowe's closed at $19.68 yesterday.

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