Story updated at 9:35 a.m. to reflect market activity.
Lowe's fell 0.6% to $50.06 in morning trading.
The analyst firm lowered its price target for the company to $50 from $60. Lowe's is leveraged to a slowing housing market according to Wedbush.
"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," analyst Seth Bashman wrote. "Traffic will likely stall first, followed by ticket in late 2014/early 2015."
Separately, TheStreet Ratings team rates LOWE'S COMPANIES INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LOWE'S COMPANIES INC (LOW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- LOWE'S COMPANIES INC has improved earnings per share by 11.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LOWE'S COMPANIES INC increased its bottom line by earning $2.13 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($2.64 versus $2.13).
- The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 5.9% when compared to the same quarter one year prior, going from $289.00 million to $306.00 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Specialty Retail industry and the overall market on the basis of return on equity, LOWE'S COMPANIES INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 34.76% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: LOW Ratings Report