Lowe's (LOW) Stock Forecast & Price Target

Lowe's Companies has demonstrated a solid financial performance, evidenced by a 3.2% increase in total sales to $20.8 billion and a year-over-year gross margin expansion of 50 basis points to 34.2%. The company's strategic focus on enhancing its professional service offerings, as well as the introduction of a home improvement-focused Marketplace, positions it to capture additional market share while optimizing its revenue streams. Additionally, the ongoing growth in its professional clientele segment, now accounting for 30% of sales, alongside improvements in online sales and inventory management, suggests a robust foundation for continued performance in the home improvement sector.

Lowe's Companies has reported a significant decrease in inventory by $400 million year-over-year, resulting in a total of $17.2 billion, which may face future pressures from higher tariff costs. The addition of lower-margin businesses, such as FBM, is expected to negatively impact overall operating margins, leading to projected contractions of 20 basis points in 2025 and an additional 30 basis points in 2026. Furthermore, anticipated slower sales growth driven by potential increases in interest rates and changes in consumer spending habits, coupled with decreases in employment trends, pose risks to Lowe's sales and margin expansion efforts.