Lowe’s downgraded over housing sector declines and potential work slowdown

Lowe’s Cos. LOW,
-2.55%
shares fell 2.8% in early Monday trading after the home improvement store was downgraded to neutral from outperform at Wedbush. Analysts lowered the price target from $225 to $210. Wedbush, in his note, cites weakness in the housing sector and says existing dollar sales of existing home sales have peaked with a minimal growth forecast for 2022. Less affordability and limited supply are also putting pressure on sales. Accordingly, very difficult comparisons could result in medium-single digit declines in average compositions for Home Depot and Lowe’s for the next four quarters (vs. consensus for a low-single digit decline), and very low single-digit compositions from 2Q-4Q22 (vs. consensus average single digit increase) in our baseline scenario analysis,” the note said. Analysts maintained their neutral rating on Home Depot Inc. HD,
-1.33%
Wedbush analysts led by Seth Basham also say homeowners have been making renovations to accommodate the work-from-home lifestyle. “If companies require employees to work full-time in the office when the pandemic ends, this spending could slow down,” the note said. Lowe’s stock is up 21.6% so far, while the S&P 500 index SPX,
-0.11%
rose by 17.5% over the period.

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