Shares of Lowe’s Companies Inc (NYSE:LOW) tanked in early trading on Thursday, despite the company’s upbeat first-quarter report.
Here are the key analyst insights:
- JPMorgan analyst Christopher Horvers maintained an Overweight rating, while slashing the price target from $325 to $279.
- BofA Securities analyst Christopher Nardone reiterated a Neutral rating and cut the price target from $260 to $257.
Check out other analyst stock ratings.
JPMorgan: Lowe’s overall results were solid, with sales slightly missing expectations. Still, earnings of $3.03 per share topped consensus of $2.97 per share due to a higher-than-expected gross margin of 32.7%. Consistent with rival Home Depot Inc (NYSE:HD), the company reiterated its full-year guidance.
The company lowered its second-quarter earnings outlook to around $4.24 per share, down from its prior projection of $4.46 per share, reflecting a slightly softer comp outlook and gross margin pressure. Target expects to mitigate these pressures, arising from promotional events and higher energy costs, in the back half of the year, Horvers said in a note.
BofA Securities: Lowe’s lowered its second-quarter earnings guidance reflects a 2% year-on-year decline due to "incremental operating margin pressure from higher transportation costs and investment in sales-driving initiatives," Nardone said. These pressures are in addition to the previously disclosed headwinds from the acquisitions of FBM (Foundation Building Materials) and ADG (Artisan Design Group), he added.
Management is trying to drive sales through promotions and marketing, amid a weak DIY market and elevated cost pressures, the analyst stated. While productivity initiatives could help offset transportation costs in the back half of the year, the company "deserves credit for consistently managing costs well in tough environments," he further wrote.
LOW Price Action: Shares of Lowe’s had declined by 2.18% to $216.60 at the time of publication on Thursday.
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