Lowe's (LOW) Time Has Come
Lowe's (NYSE: LOW) underperformance relative to Home Depot (NYSE: HD) is no secret to investors following the sector. Analyst at Oppenheimer tie Lowe's underperformance to aggressive re-merchandising efforts and "a string of internal missteps". However, as the housing market turns and demand trends get back on track, analysts say LOW is "approaching a positive fundamental turn".
"We have for some time looked favorably on the potential for a US housing market recovery and hence better demand trends within the Home Improvement sector. Data suggest that our thesis is playing out well," said analyst Brian Nagel.
"LOW is well under way with its merchandising transformation. Line reviews will be largely completed by the end of the year with merchandise resets expected to be wrapped up in mid-2013. Comp and margin benefits from management initiatives should start to accrue more meaningfully in mid-2013 and beyond," continued Nagel.
Oppenheimer lifted Q3 EPS estimates to 35c, in line with the street. On a longer-term basis, analysts say Lowe's can earn $3 per share, compared to current year forecasts of $1.67.
Oppenheimer has a Buy rating on Lowe's and a new price target of $42 (from $32).
For an analyst ratings summary and ratings history on Lowe's click here. For more ratings news on Lowe's click here.
Shares of Lowe's closed at $31.97 yesterday, with a 52 week range of $22.39-$33.63.
"We have for some time looked favorably on the potential for a US housing market recovery and hence better demand trends within the Home Improvement sector. Data suggest that our thesis is playing out well," said analyst Brian Nagel.
"LOW is well under way with its merchandising transformation. Line reviews will be largely completed by the end of the year with merchandise resets expected to be wrapped up in mid-2013. Comp and margin benefits from management initiatives should start to accrue more meaningfully in mid-2013 and beyond," continued Nagel.
Oppenheimer lifted Q3 EPS estimates to 35c, in line with the street. On a longer-term basis, analysts say Lowe's can earn $3 per share, compared to current year forecasts of $1.67.
Oppenheimer has a Buy rating on Lowe's and a new price target of $42 (from $32).
For an analyst ratings summary and ratings history on Lowe's click here. For more ratings news on Lowe's click here.
Shares of Lowe's closed at $31.97 yesterday, with a 52 week range of $22.39-$33.63.