Lowe's Companies Inc. (LOW) reported third-quarter earnings that cleared a pretty low bar this week, but the market's response was lukewarm at best. Shares bounced around on Thursday despite results that had analysts saying "better than feared" — which, let's be honest, is not exactly a ringing endorsement.
The analyst community delivered a mixed verdict. DA Davidson's Michael Baker kept his Neutral stance while trimming his price target from $266 to $250. JPMorgan's Christopher Horvers was more upbeat, maintaining an Overweight rating and bumping his target from $275 to $300. Telsey Advisory Group's Joseph Feldman also stayed bullish with an Outperform rating, raising his target from $285 to $305.
The Case for Optimism
Here's where it gets interesting: Lowe's CEO Marvin Ellison pointed out that homeowners are sitting on roughly $400,000 in home equity on average. Both Lowe's and Home Depot Inc. (HD) estimate there's about $50 billion in deferred home improvement spending waiting to happen.
Baker from DA Davidson suggested these numbers point to "potential for a rebound in home improvement." But here's the catch — while a housing market recovery would help both retailers, he prefers Home Depot for its superior margins and stronger exposure to professional contractors.
Why Lowe's Sounded More Upbeat
JPMorgan's Horvers noted that Lowe's management struck a more optimistic tone than Home Depot did. Two reasons stood out: First, Lowe's internal improvements are driving market share gains with professional customers and better performance in big-ticket categories. Second, Home Depot needed to walk back some of its bullish second-quarter commentary.
Both retailers saw comparable sales improve on a two-year basis. Horvers expects "incremental replacement demand, modest EHS improvement, and a tick of inflation" to support roughly 1% comparable sales growth in the fourth quarter, with marginal improvements heading into 2026.
The Persistent Challenges
Telsey's Feldman observed that Lowe's assessment largely echoed what Home Depot shared a day earlier: an uncertain consumer environment, a sluggish housing market pressuring project spending, and reduced storm-related sales in the second half of 2025.
Still, Feldman highlighted that Lowe's strategic initiatives are working. The company is gaining market share through "improved merchandise, higher penetration with small- to medium-sized Pros, and technology enhancements in areas like digital and marketplace." As of November, Lowe's comparable sales have been positive and actually outpacing Home Depot.
Shares of Lowe's were up a modest 0.07% at $228.57 on Thursday.
