LOW: Pro Segment And Lock-In Effect Will Support Future DemandI updated the title after noticing it did not meet the 7-word minimum.

Analysts have trimmed their blended price target for Lowe's Companies by a few dollars, reflecting slightly higher discount rate assumptions and tempered near term guidance, despite expectations for improving revenue growth, stable margins, and long term demand supported by homeowners' lock in effect and rising home equity.

Analyst Commentary

Recent Street updates reflect a more nuanced stance on Lowe's, with modestly lower price targets but a generally constructive view on the company’s long term positioning and earnings power.

Bullish Takeaways

• Bullish analysts maintain Buy and Outperform ratings even after trimming targets. This signals confidence that the recent pullback does not materially impair the long term return profile.
• The lock in effect, where homeowners are incentivized to stay put to preserve low mortgage rates, is seen as a structural tailwind that should support steady demand for renovation and repair projects over time.
• High and rising home equity levels are viewed as an important funding source for big ticket projects, supporting a thesis for reaccelerating comparable sales as macro headwinds ease.
• Investments in productivity and the Pro contractor segment are expected to narrow the performance gap versus peers and drive market share gains, supporting margin expansion and multiple resilience.

Bearish Takeaways

• Bearish analysts highlight that near term guidance implies softer Q4 trends than previously expected. This raises questions about the timing of a clear growth inflection.
• Comparable sales decelerated amid tough hurricane comparisons, a pressured housing market, and consumer uncertainty, which could cap valuation until demand visibly improves.
• While rate cuts and seasonal catalysts may help, there is concern that macro and housing pressures could persist longer than anticipated, delaying operating leverage and EPS growth.
• Execution risk remains around closing the productivity gap and fully monetizing Pro investments, leaving limited room for missteps in an already competitive home improvement landscape.

What's in the News

• Lowe's raised its full year 2025 total sales guidance to $86.0 billion, up from a prior range of $84.5 billion to $85.5 billion. This signals improved confidence in demand and execution (Corporate Guidance).
• Smart home brand Aqara launched its Wi Fi enabled Smart Lock B50 across more than 500 Lowe's stores and on Lowes.com, expanding Lowe's connected home assortment with a hub free, app controlled security solution (Client Announcement).
• SenesTech's Evolve Rat birth control soft bait became available on Lowes.com, broadening Lowe's pest control offerings with a non poison, reproduction targeting solution aimed at homeowners and DIY customers (Client Announcement).
• Alpha Modus Corp. filed a patent infringement lawsuit against Lowe's in the U.S. District Court for the Eastern District of Texas, alleging Lowe's in store AI, computer vision, and retail media systems infringe six patents tied to real time analytics and personalized marketing (Lawsuits and Legal Issues).
• Lowe's updated its large scale fixed income financing plans, adding multiple major banks, including J.P. Morgan, Citigroup, Goldman Sachs, Barclays, BofA Securities, Wells Fargo, and U.S. Bancorp Investments, as co lead underwriters across several multi hundred million to billion dollar debt offerings (Public Offering Lead Underwriter Changes).

Valuation Changes

• Fair Value: Increased slightly from approximately $272.50 to about $272.97 per share, reflecting a modest uplift in intrinsic value estimates.
• Discount Rate: Risen slightly from roughly 9.14% to about 9.28%, implying a marginally higher required return and modestly more conservative risk assumptions.
• Revenue Growth: Increased moderately from around 5.38% to approximately 5.91%, signaling a somewhat stronger outlook for top line expansion.
• Net Profit Margin: Edged down slightly from about 8.24% to roughly 8.21%, indicating a minimal compression in expected profitability.
• Future P/E: Declined slightly from approximately 23.98x to about 23.84x forward earnings, suggesting a modestly lower valuation multiple applied to projected results.