Lowe's Eyes Growth As Housing Market Nears Turning Point

Core Insights - Lowe's Companies, Inc. is focusing on growth in a stagnant home improvement market by utilizing recent acquisitions and expanding its Pro platform to tap into unmet demand while managing challenges from weather and interest rates [1][2] Management View - Management describes the consumer as "healthy," supported by positive wealth effects and income growth, with the anticipated flat home improvement market unfolding as expected [3] - A true market inflection is contingent on lower interest rates, as consumers are currently delaying spending in the category [3][4] - The company has significant exposure to big-ticket spending, despite 70% of its business being DIY [4] - Management anticipates an improvement in replacement cycles by 2026, which could lead to better market growth and continued outperformance, contingent on further rate cuts to stimulate housing turnover and release $50 billion in pent-up demand from homeowners [4] Analyst View - The analyst holds a more optimistic outlook that does not rely on further declines in mortgage rates, expecting a 3% growth in Existing Home Sales (EHS) in 2026, driven by better replacement cycles, tax stimulus, and slight inflation [5] - A remodeling cycle is not expected at current rates due to affordability issues and stagnant home price appreciation, presenting a relative risk for the company [6] - The sector is facing challenging year-over-year comparisons due to favorable weather last year and the impact of hurricanes in late September/early October 2024, which added approximately 100 basis points to the third quarter [6] Stock Performance - The analyst rated Lowe's stock as Overweight, with shares trading higher by 0.69% to $245.76 at the last check [7]