Citi upgrades Lowe’s to Buy but retail sector faces uncertain consumer outlook
Investing.com -- Analysts at Citigroup upgraded Lowe's to “Buy” in a new earnings preview report, arguing the home improvement retailer is well-positioned to outperform rivals despite ongoing macroeconomic uncertainty and a sluggish housing market.
The report, covering the U.S. broadlines and hardlines retail sector ahead of first-quarter earnings, said the group has underperformed in 2026 amid fears over weakening consumer demand and rising fuel prices. Citi noted, however, that most retailers are still expected to deliver results that are in line with or slightly above Wall Street expectations.
Citi upgraded Lowe’s from “Neutral” to “Buy” while maintaining its $285 price target, citing four consecutive quarters of positive same-store sales growth and continued market share gains over rival Home Depot. Analysts said Lowe’s benefits from greater exposure to do-it-yourself customers and smaller home improvement projects, which could prove more resilient in the current economic environment.
“We believe the home improvement industry has bottomed,” Citi analysts wrote, adding that lower interest rates and easing geopolitical tensions could support a multi-year recovery in housing-related spending.
The bank also highlighted valuation as a key factor behind the upgrade. Lowe’s currently trades at roughly 16.5 times forward earnings, a discount to other large retail leaders despite projected long-term earnings growth above 10%, according to the report.
Among Citi’s top retail picks are O'Reilly Automotive, Home Depot, AutoZone, Lowe’s, and Ollie's Bargain Outlet.
Elsewhere in the sector, Citi maintained cautious views on several consumer-facing names, including Best Buy and Petco, citing tougher sales comparisons and uneven consumer spending trends.
The report comes as investors closely monitor the health of the U.S. consumer amid elevated oil prices, geopolitical tensions, and continued uncertainty in the housing market. Citi said catalysts for a stronger retail recovery would include lower interest rates, declining oil prices, and improving consumer confidence.