Lowe’s Stock Gets a Boost as J.P. Morgan Raises Rating on Potential Federal Reserve Rate Cuts
Lowe’s, the popular home-improvement company, could see significant gains this year thanks to the Federal Reserve’s anticipated interest rate cuts, according to J.P. Morgan. The banking giant recently upgraded Lowe’s stock rating to Overweight from Neutral and increased its target stock price to $265 from $210. In addition, J.P. Morgan identified Lowe’s as a potential value investment, adding it to their Analyst Focus List.
The Federal Reserve’s expected interest rate cuts are likely to result in lower mortgage rates, which could potentially drive sales of existing homes. This positive trend bodes well for Lowe’s shares. J.P. Morgan analysts, including Christopher Horvers, highlighted that homeowners looking to sell might opt for small upgrades, while new buyers typically purchase basic items for their new homes, such as garbage cans, flower pots, and shades. This surge in DIY projects could greatly benefit Lowe’s.
J.P. Morgan predicts that Lowe’s will adopt a conservative approach for 2024, projecting per-share earnings between $12 and $12.50. However, analysts tracked by FactSet are slightly more optimistic, expecting earnings around $13 per share. Notably, Lowe’s adjusted its 2023 earnings guidance in November to approximately $13 per share, down from the previous estimate of $13.20 to $13.60. Investors eagerly await Lowe’s fourth-quarter financial results, which are scheduled for release later this month.
J.P. Morgan sees multiple avenues for shares to flourish this year, including potential rate cuts and an upswing in home sales. The bank expects Lowe’s management’s guidance to reflect a stronger second half of the year. In Monday’s trading, Lowe’s stock experienced a 3.3% increase, reaching $229.51, while Home Depot shares rose 1.2% to $367.45. The S&P 500, however, remained flat.
With the Federal Reserve’s anticipated interest rate cuts and promising trends in the housing market, Lowe’s is positioned for growth. Analysts are closely watching for future updates from the company, as investors look to capitalize on this positive outlook.
Analyst comment
Positive news. Market analysts expect Lowe’s stock to see significant gains due to the Federal Reserve’s anticipated interest rate cuts, which are likely to result in lower mortgage rates and drive sales of existing homes. J.P. Morgan upgraded Lowe’s stock rating and increased its target stock price. Analysts predict that Lowe’s will benefit from a surge in DIY projects and homeowners’ small upgrades. The company’s management guidance is expected to reflect a stronger second half of the year. Investors eagerly await Lowe’s financial results.
