The firm set a price target of $58 for the home improvement retailer, up from its previous mark of $51.
Jefferies also reiterated its "hold" rating and increased the annual EPS earnings estimate for fiscal 2016 to $3.01 from $2.98.
The firm said Lowe's is benefiting from recovery in remodel spending, which is still below long-term averages.
"We are encouraged by home price appreciation, which we believe has been the biggest driver of home improvement spending," said analysts at Jefferies. "Given the relatively small multiple gap between the two companies, we still prefer Home Depot Inc. (HD) to Lowe's given its relative outperformance."
Shares of Lowe's Companies are up 0.31% to $58.18 in late morning trading on Wednesday.
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, solid stock price performance, impressive record of earnings per share growth, increase in net income and good cash flow from operations. 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:
- LOW's revenue growth has slightly outpaced the industry average of 1.5%. Since the same quarter one year prior, revenues slightly increased by 5.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- LOWE'S COMPANIES INC has improved earnings per share by 18.2% 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 ($2.63 versus $2.13).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 10.3% when compared to the same quarter one year prior, going from $942.00 million to $1,039.00 million.
- Net operating cash flow has increased to $1,929.00 million or 41.42% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 20.78%.
- You can view the full analysis from the report here: LOW Ratings Report