Lowe’s Could See Some Relief on EPS Day – Wells Fargo
2022.08.03 20:58
Lowe’s (LOW) Could See Some Relief on EPS Day – Wells Fargo
By Sam Boughedda
According to a Wells Fargo analyst, Lowe’s Cos. (NYSE:LOW) shares could see some relief when the company reports earnings later this month.
The analyst lowered the firm’s price target on the stock to $220 from $240 in a research note.
“If Q2 has taught us anything thus far (guide cuts up; in-line/beats down), LOW shares could see some relief on EPS day. Sentiment is weak, Q2 appears poised to miss, and the 2H outlook (w/ 3-yr acceleration implied) likely needs a re-set,” he wrote. “While this could prove a clearing event (ala ORLY, BBY, etc.), HD remains our preferred 2H play, as the DIY customer is slowing, weather volatility persists (drought, hurricane season, etc.) and we simply view HD more insulated as leading macro indicators begin to ‘turn red.’ In Q2, we believe Pro resilience played nicely into HD’s hands, and when paired with a more conservative 2H view (3-yr deceleration), we anticipate little change in an HD playbook that’s clearly still gaining share.”
The analyst noted that Home Depot (NYSE:HD) and Lowe’s are “trading in lockstep” but said “once the sawdust settles,” they favor Home Depot’s “quality track record, stable margins, mix (more Pro, less DIY) and LT upside initiatives that remain early days.”
