Lowe's (LOW) Stock Forecast & Price Target

Lowe's Companies demonstrated improved financial performance with total sales increasing by 3.2% to $20.8 billion, and comparable store sales rising by 0.4%. The company's gross margins expanded by 50 basis points to 34.2%, attributed to the normalization of product sales, reduced losses in its credit program, and effective inventory management. Additionally, Lowe's is positioning itself for future growth by enhancing its pro customer offerings and launching a marketplace that leverages customer loyalty data, suggesting potential for increased market share and revenue across varied customer segments.

Lowe's Companies faces a negative outlook due to several fundamental issues impacting its financial performance. A significant reduction in inventory, down $400 million year-over-year, could lead to pressures from higher tariff costs that may affect earnings growth in the coming quarters. Additionally, the integration of lower-margin businesses, such as FBM and ADG, is expected to dilute overall operating margins and contribute to downward revisions of the 2025 and 2026 earnings per share estimates, further complicating the firm's margin expansion efforts in a potentially sluggish sales environment.