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A new initiation of home improvement leaders, The Home Depot (New York Stock Exchange: HD) and Lowe’s (New York Stock Exchange: Low) on Wednesday, Cowen expressed a clear preference for the former.
Company analysts show Home Depot is in a strong position to improve EBIT margins By capitalizing and “following the investment cycle to get a profit,” it drives stock price appreciation.
An analyst wrote for Home Depot (HD) on Wednesday: “Also, despite gaining share in the lower-margin professional category and potentially shifting supply chain costs, we expect gross margins to return slightly following yearly declines since FY18. doing.”
The Atlanta-based specialty retailer started with an “excellent” rating and was assigned a price target of $350.
In contrast, Lowe’s Companies (LOW) started with a ‘Market Perform’ given its various end-market exposures to Home Depot.
“Management has done a good job of strengthening fundamentals such as Pro, store, supply chain and products.” As a result, we expect continued productivity and EBIT margin growth. However, the slowdown has led to greater exposure to DIY, and the large productivity gap with HD and valuations have left the US on the sidelines.”
The North Carolina-based retailer’s shares have a price target of $210, suggesting a marginally higher trading range on Wednesday.Home Depot (HD) shares fall 2.62% In Wednesday afternoon trading while Lowes (LOW) crashed. 4.93%.
Read more about Evercore downgrading Lowes on Wednesday.
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