Lowe’s Stock Could Blast 40 % Higher, Based on Analyst
A prominent Lowe’s (NYSE:LOW) bull is charging harder on the company’s stock. Morgan Stanley analyst Simeon Gutman on Friday raised the price target of his on the home improvement retailer, upping it to $210 per share from the preceding $190 while keeping his overweight (read: buy) recommendation.
The new objective is roughly 40 % higher compared to Lowe’s most recent closing stock price.
Gutman made the modification of his on the belief that the present average analyst earnings projections for the company underestimate an important factor: demand for home improvement goods and services. The prognosticator feels it is practical that Lowe’s will hit its goal of a twelve % EBIT (earnings before interest and taxes) margin in 2021.
“Indeed, we feel [Lowe’s] will almost reach it in 2020 on a’ normalized’ [profit and loss]. This is not appreciated by the market,” he wrote in the newest research note of his on the business.
Gutman thinks the broader DIY retail landscape will typically reap some benefits from the anticipated increasing amount of demand. Being a result, his per-share earnings estimates for both Lowe’s and its arch-rival Home Depot (NYSE:HD) are notably above the average for prognosticators following those stocks — by 13 % for Lowe’s and 6 % for Home Depot.
The Morgan Stanley analyst has additionally raised his price target for Home Depot inventory, though not as dramatically. It is currently $300, out of the former $295. The brand new level is actually fourteen % above Home Depot’s most recent closing stock price.
Neither business had a memorable day in the market on Friday. Lowe’s shares fell by 1.3 %, against the 0.9 % gain of the S&P 500 index. Home Depot declined by almost 1.6 %.
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