Lowe's (LOW) Stock Forecast & Price Target

Lowe's Companies has demonstrated solid financial performance, with total sales increasing by 3.2% to $20.8 billion and gross margins expanding by 50 basis points year-over-year to 34.2%, driven by a more favorable product mix and improved credit revenue. The company's strategic initiatives, such as the expansion of its professional segment to 30% of sales and the introduction of a home improvement-focused Marketplace, are expected to enhance its revenue streams and customer engagement. Additionally, the growth in big-ticket products and the acceleration of online sales, fueled by website and app enhancements, further position Lowe's favorably within the competitive home improvement market.

Lowe's Companies is experiencing a downturn in its financial outlook, highlighted by a significant reduction in inventory levels, which fell $400 million year-over-year to $17.2 billion, primarily due to productivity solutions and SKU reductions, but likely facing pressure from higher tariff costs in the near future. The company's margin expansion efforts are jeopardized by slower or negative sales growth resulting from potential sharp interest rate increases and shifts in consumer spending away from home improvement, leading to lowered EPS estimates for both 2025 and 2026. Additionally, the integration of lower-margin acquisitions, such as FBM, is expected to negatively impact operating margins, with a projected contraction of 20 basis points in 2025 and 30 basis points in 2026.