Telsey Advisory Group analyst Joseph Feldman reiterated the Market Carry out score on Lowe’s Firms, Inc. LOW, decreasing the worth goal to $225 from $230.
Given the powerful macro local weather for the business, the analyst lowered 3Q23 and annual estimates on the corporate, which can weigh on the near-term prospects.
Feldman notes that the corporate’s enterprise will possible stay beneath strain from the mushy housing market developments.
Additional, demand pressures have continued to accentuate and greater than anticipated because the 2Q23 earnings name on August 22, indicating that gross sales in 3Q23 ought to are available beneath the corporate’s acknowledged steering.
As well as, the resumption of pupil mortgage funds this month is anticipated to pose a damaging headwind on the enterprise, albeit the exact influence is unsure and is predicted to be lower than with most different industries and firms, the analyst provides.
For 3Q23, the analyst lowered the EPS estimate to $3.08 from $3.14. For 2023, Feldman’s EPS estimate is now $13.38 vs. $13.49 beforehand.
Shrink has been a major concern throughout retail this yr, however Lowe’s has achieved a strong job managing it this yr—the corporate expects the monetary influence of shrink in 2023 to be roughly flat with final yr at about 100 bps and vs. mid-60 bps again in 2019.
As well as, Lowe’s has benefited from having a extra rural retailer footprint, which creates much less publicity to not too long ago elevated theft and arranged crime in additional city areas, the analyst provides.
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Worth Motion: LOW shares are buying and selling decrease by 0.23% to $199.70 on the final examine Wednesday.
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