Deutsche Bank Reiterates Buy Rating, $46 PT on Lowe's Companies Following Orchard Supply Purchase

In a report published Monday, Deutsche Bank analyst Mike Baker reiterated a Buy rating and $46.00 price target on Lowe's Companies LOW. In the report, Deutsche Bank noted, “LOW will pay about $205mm, buying at least 60 of 91 Orchard stores out of bankruptcy. LOW will also assume Orchard's payables obligations, which stood at $48mm at the end of 4Q12. LOW will operate Orchard Supply as a separate chain, maintaining the Orchard Supply brand name. The acquired stores will be metro locations in California, giving LOW a new platform to serve a market in which they currently have relatively minimal impact. Orchard stores are about 33,000 square feet. The company generated $657mm in sales last year on a flat comp. Operating loss was $125mm, but this included about $127mm in charges. Adjusted 2012 EBITDA was $24mm, down from $45mm the previous year.” Lowe's Companies closed on Friday at $41.16.
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Posted In: Analyst ColorReiterationAnalyst RatingsConsumer DiscretionaryDeutsche BankHome Improvement RetailMike Baker
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