UBS Remains Bullish on Lowe’s Companies, Inc. (LOW) Despite Disappointing Q2

Lowe’s Companies, Inc. (NYSE:LOW) reported second-quarter earnings yesterday. On the back of a rising house market that failed to spark sales for the home-improvement retailer, in spite of a disappointing underperformance, UBS analyst Michael Lasser remains bullish.

For a company whose comp fell below the analyst’s forecast and consensus, compared to last quarter’s outperformance, Lasser understands these results do not do LOW any favors, especially in the context of the retailer’s focus on promotional efforts. Despite this, Lasser reiterates a Buy rating on shares of LOW with a $88 price target, which represents a 14% increase from where the shares last closed.

Lasser believes, “We suspect that Lowe’s underperformance this quarter was due to its greater exposure to seasonal and outdoor categories, which took a step back due to the weather. Averaging the first and the second quarters would mean that LOW’s did a 4.7% comp in 1H, while HD did 6.4%. So, the gap on that basis is about 170 bps. Still, it will be important to hear that LOW is holding its own from a market share perspective in core categories. We think it is. Thus, we would view weakness today as a buying opportunity.”

According to TipRanks, five-star analyst Michael Lasser is ranked #102 out of 4,124 analysts. Lasser upholds a high 72% success rate while realizing 11.4% in his yearly returns. When recommending LOW, Lasser earns 21.5% in average profits on the stock.

TipRanks analytics show LOW as a Strong Buy. Based on 13 analysts polled in the last 3 months, 11 rate a Buy on LOW, while 2 maintain a Hold. The 12-month average price target stands at $89.45, marking a 16% upside from where the stock is currently trading.

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