Barclays Raises Lowe's Companies Price Target

Barclays raised its price target on Lowe's Companies, Inc. LOW Friday from $60 to $70 and maintained an Equal-Weight rating.

Analysts Alan M. Rifkin and Sam Reid attended the Lowe's analyst day in Charlotte, North Carolina on Thursday. Rifkin commented that senior management made a presentation on “corporate initiatives and discussed NT and LT financial targets.”

“The tone of the presentations were optimistic, focusing on Lowe's efforts to improve domestic productivity, building its omni-channel and evaluating growth opportunities in Canada, Mexico and Australia,” according to Rifkin.

The company “articulated that 2014 FY guidance remains unchanged, with targets for sales growth of 4.5-5.0 percent, comps of 3.5-4.0 percent and diluted GAAP EPS of $2.68, implying diluted non-GAAP EPS of $2.65. Our 2014 EPS estimate of $2.65 remains unchanged.”

The company’s CFO, Robert F. Hull, Jr., “indicated that about half of the company's EBIT expansion would be driven by lower SG&A, with the balance coming from deprecation and modest improvements to gross margin. This growth rate effectively implies 2017 EPS of $4.70.

“While we are only forecasting earnings for Lowe's through 2016, we are taking a significantly more conservative approach to the company's earnings profile, with EPS of $3.55 in 2016 - well below the growth rate implied by the company's 2017 target.”

Lowe's Companies recently traded at $65.42, down 0.52 percent.