stock has jumped some 35% in 2020, as demand booms amid the Covid-19 pandemic. Loop Capital argues the shares could see another 20% gain, as consumers continue to pour money into their homes.
Analyst Laura Champine reiterated a Buy rating on Lowe’s (ticker: LOW) shares Wednesday, while raising her price target to $195 from $180.
She is increasingly confident that the company will continue to see sales boosted by the crisis, as people realize that they’ll likely be spending more time at home for longer, and need that space to serve more needs than it used to.
Indeed, as Barron’s has reported, the majority of the nation’s public school students were set to start the academic year remotely, while employers warm up to the idea of remote working, and consumers are spending big to be able to exercise at home. With homes now expected to serve as offices, classrooms, gyms, and entertainment centers, it’s easy to see why many people are spending money on improvements—especially when other discretionary categories, like travel and dining out, aren’t as appealing.
While Lowe’s and rival
(HD) have already reported great results on the back of this trend, Champine expects to see “many more quarters” with above-average consumer spending on home improvement. She also notes that strong inventory control (coupled with high demand) mean that Lowe’s shouldn’t have to do many margin-crimping sales.
Of course, spring and summer are traditionally the key seasons for do-it-yourself home projects. Yet this year could see more strength carry into the colder months. With cold and flu season rapidly approaching, worries about a second-wave of Covid transmissions may keep more people at home, and willing to spend money to make that stay more comfortable.
Lowe’s is edging up 0.1% to $161.73 in recent trading.
Write to Teresa Rivas at firstname.lastname@example.org