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Lowe's Pinned to Neutral

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We have maintained our long-term Neutral recommendation on Lowe's Companies Inc. (LOW - Free Report) with a target price of $41.00.

Why the Reiteration?

Being the world’s second largest home improvement retailer, Lowe’s remains well positioned to benefit from the housing market recovery. The company is closing underperforming stores and its strategy of enhancing customer-shopping experience and merchandising transformation is likely to help it generate incremental sales. Moreover, the company’s sustained focus on price management and adding extra labor hours will help boost its market share. 

Giving itself a new face lift, Lowe’s came up with a new tag line “Never Stop Improving”, manifesting its new brand strategy and endeavor toward improving and developing innovative ideas. The company also launched an online tool, “MyLowes”, to aid consumers better manage their homes and other remodeling projects. We believe these initiatives would give it a competitive advantage over its peers.

Planning ahead, this Zacks Rank #3 (Hold) company is expanding into high-growth markets, which bring significant opportunities to improve its top line and profitability.

However, we maintain our Neutral recommendation on Lowe’s as spending on big remodeling projects will likely remain under pressure until the housing market stabilizes, inventory levels normalize and consumer-spending rebounds.

Other Stocks to Consider

Until any further upgrade on Lowe’s Zacks Rank, other stocks worth considering in the retail/wholesale sector include Fortune Brands Home & Security, Inc. (FBHS - Free Report) ,  Haverty Furniture Companies Inc. (HVT - Free Report) and Restoration Hardware Holdings, Inc. (RH - Free Report) all of which hold a  Zacks Rank #1 (Strong Buy) and are expected to continue with their upbeat performance.

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