Lowe’s Companies, Inc. LOW is in the “payoff stage of its transformation” and remains a strong buy, Morgan Stanley said in a note today. The firm said that it favors Lowe’s over Home Depot Inc HD because Lowe’s has shown it can execute and has “more margin upside potential.”
Regarding Q4 earnings, Morgan Stanley said the results were better than expected with expanding EBIT margin in 2015.
Most importantly, however, Morgan Stanley said Lowe’s is finished executing its transformation plan, allowing the company to capitalize on the tailwinds in the home improvement space. Notably, during its Northeast store visits, Morgan Stanley noted it saw spring merchandise “being set much earlier than usual in anticipation of a strong selling season.”
The stock price is bouncing around sharply this morning, but at the moment, Lowe’s is trading 1 percent lower to $73.70.
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