Lowe's Companies, Inc. (LOW) just gave Wall Street one of those classic good news-bad news moments. The home improvement giant cleared the earnings bar in its third quarter but came up a hair short on the sales side, and now analysts are busy recalculating what it all means for the stock.
The earnings picture looked solid. Lowe's reported third-quarter adjusted earnings per share of $3.06, marking a respectable 5.9% jump from last year and beating the Street's $2.97 estimate. But then there's the revenue line: quarterly sales hit $20.813 billion, just barely missing the $20.823 billion consensus. Not exactly a catastrophic miss, but enough to remind everyone that the home improvement category isn't exactly firing on all cylinders.
The company's updated fiscal 2025 guidance tells the real story here. Lowe's is clearly feeling cautious about what's ahead, trimming its comparable-sales outlook to a flat 0% from the previous 0% to 1% range. That's management speak for "we're not sure things are getting better anytime soon." The company also said it expects to deploy up to $2.5 billion in capital spending.
There's a silver lining, though. Lowe's tightened its fiscal 2025 adjusted EPS guidance to $12.25 from a prior range of $12.20 to $12.45, which sits just below the $12.29 analyst estimate. More impressively, the company raised its total sales outlook to $86.0 billion from the previous $84.5 billion to $85.5 billion range, comfortably beating expectations of $85.415 billion. So even if comparable sales aren't growing, the overall business is getting bigger.
The stock took the news in stride, dipping just 0.1% to $228.16 on Thursday.
As for the analyst community, they've been busy revising their models. Here's how the Wall Street crowd responded:
Bernstein analyst Zhihan Ma kept an Outperform rating and nudged the price target up slightly from $282 to $284. Telsey Advisory Group analyst Joseph Feldman also maintained an Outperform rating but took a bigger haircut, lowering his target from $305 to $285. Baird analyst Peter Benedict stuck with Outperform while trimming his target from $295 to $290.
DA Davidson analyst Michael Baker held steady with a Neutral rating but brought his price target down from $266 to $250. Bank of America Securities analyst Elizabeth Suzuki maintained a Buy rating while cutting her target from $290 to $280. RBC Capital analyst Steven Shemesh kept a Sector Perform rating and lowered his target from $260 to $252. Finally, Mizuho analyst David Bellinger maintained an Outperform rating but reduced his target from $285 to $272.
The pattern is pretty clear: most analysts still like the stock, but they're adjusting expectations downward to match the reality of a sluggish home improvement market. When you beat on earnings but have to guide comparable sales to zero growth, it's hard to justify the most aggressive price targets.
