Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Lowe's Companies, Inc. Went Lower Today

By Brian D. Pacampara, CFA - Mar 6, 2014 at 10:25AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Does this analyst make a good case or is it just more noise from Wall Street?

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Lowe's Companies ( LOW 0.31% ) slipped about 1% this morning after Wedbush downgraded the home-improvement giant from outperform to neutral.

So what: Along with the downgrade, analyst Seth Basham lowered his price target to $50 (from $60), pretty much in line with the stock's current levels. While momentum traders might be attracted to the company's share price strength over the past year, Basham thinks that Mr. Market is currently underestimating the housing market headwinds working against its near-term growth.

Now what: According to Wedbush, Lowe's risk/reward trade-off is pretty balanced at this point. "While we continue to believe LOW is now positioned to maintain or gain share as burgeoning operational momentum takes hold, a slowing housing market may pressure comps by 50-100 bps more than expected in 2014, with the impact primarily in the back half of the year," cautioned Basham. "Traffic will likely stall first, followed by ticket in late 2014/early 2015." When you couple that possible sluggishness with Lowe's 20-plus P/E, it's tough to disagree with Wedbush's cautious stance. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lowe's Companies, Inc. Stock Quote
Lowe's Companies, Inc.
LOW
$245.34 (0.31%) $0.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
656%
 
S&P 500 Returns
144%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/02/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.