Lowe's (LOW) Stock Forecast & Price Target

Lowe's Companies has demonstrated improved financial performance, with total sales rising 3.2% to $20.8 billion and a gross margin increase of 50 basis points year-over-year, reaching 34.2%. The firm has successfully expanded its focus on professional customers, growing its Pro business to 30%, which is anticipated to further enhance revenues, especially following the acquisition of FBM. Additionally, the launch of a home improvement-focused Marketplace and bolstered online sales through enhanced digital engagement positions Lowe's for continued growth in the competitive home improvement sector.

Lowe's Companies has experienced a year-over-year reduction in inventory, down $400 million to $17.2 billion, largely attributed to improved productivity solutions and SKU reductions, though increased tariff costs may pressure inventory levels in future quarters. The company's operating margins are under scrutiny due to the acquisition of lower-margin businesses and potential declines in industry sales attributed to interest rate fluctuations, which could hinder margin expansion efforts. Furthermore, revised earnings per share (EPS) estimates for 2025 and 2026 reflect a downward trend, signifying challenges in maintaining profitability amid slowing sales growth and adverse employment trends.