Lowe's upgraded to Overweight by JPMorgan on future rate cuts
JPMorgan analysts upgrade Lowe's (LOW) stock to Overweight, raising the home improvement retailer's price target to $265 per share on the positive relationship between interest rate cut forecasts and home projects. Yahoo Finance Live anchors Brad Smith and Rachelle Akuffo break down the details.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
BRAD SMITH: Time now for some trending tickers. We're watching shares of Lowe's after getting an upgrade from JP Morgan to overweight from neutral. The analyst behind the call also raising his price target on the stock from $210 to $265, saying the home improvement company will benefit from future Fed rate cuts here. You're taking a look at the details that we just ran through here a moment ago.
Shares certainly on the move off of this news and one of the huge things that was called out. They also discussed the specifics specific to the home improvement category. They estimate that they're less than 5% from pre-COVID wallet share right now with direct-- not direct to consumer-- with DIY, that Do It yourself 75% of Lowe's mix, they note, versus 50% for Home Depot. Experiencing a larger headwind since the start of post-COVID normalization in early 2021.
RACHELLE AKUFFO: And I thought it was interesting they drew the comparison with the DIY share of the business, which is much higher for Lowe, 75% of Lowe's mix versus 50% for Home Depot. And that they also went in talking about the Fed's price interest rate cuts saying, look, you have a lot of people who've been locked into these low priced mortgages.
And so perhaps if we see interest rates come down, more people will be inclined to perhaps move, remodel. So it's really basing it on some of the confidence that they're seeing in that market and some of, the hopes that some of that locked in mortgage market will start to loosen a little bit there.
BRAD SMITH: Yeah. As indicated, they also believe it's widely expected that Lowe's will guide somewhere in the 12 to 12 and a half-- $12.50 and range essentially for 2024 to clear the decks here. So we'll see exactly what Lowe's has to come out and say this week.
RACHELLE AKUFFO: Indeed. Perhaps some good news for those potential homeowners.
