Piper Sandler analysts reaffirmed their Overweight rating for Lowe's (NYSE:LOW), maintaining a price target of $262, following the company's mixed second-quarter results and an anticipated guidance revision for the year.
Despite sales falling short of expectations, Lowe's managed to deliver an earnings per share beat through effective cost management. The company saw positive growth in its Pro segment, with mid-single-digit percentage gains, contrasting with Home Depot’s year-over-year Pro decline, thanks to initiatives that are helping capture market share among smaller and medium-sized professionals.
While Lowe's performance aligned with some expectations, ongoing weakness in the do-it-yourself (DIY) sector remains a concern. The analysts highlighted that Lowe's current valuation relative to the S&P 500 sits below its long-term average but expect the valuation to rise once interest rates decline. Despite favoring Lowe’s for its positive Pro performance, the analysts remain more optimistic about Home Depot due to its greater Pro market exposure.