KeyBanc Raises Lowe's Price Target, Likes Ellison's Leadership Style

Lowe's Companies, Inc. LOW, under the leadership of new CEO Marvin Ellison, is headed in the right direction and investors should be buyers of the stock, according to KeyBanc.

The Analyst

KeyBanc Capital Markets' Bradley Thomas maintains an Overweight rating on Lowe's with a price target lifted from $105 to $115.

The Thesis

A deep-dive into Ellison's leadership style bodes well for Lowe's as he focuses on "simplicity and people," Thomas said in a note. The executive has succeeded in prior jobs by tackling the "tough assignments" through simple solutions, respecting the existing culture, and understanding when things go wrong it is 100 percent the result of poor leadership.

A new management style may be what shareholders want as Lowe's has developed a reputation of inconsistent earnings which is frustrating for shareholders, the analyst said. If Ellison succeeds in delivering consistent earnings beats then new investors will be attracted to the stock over time.

Meanwhile, recent data suggests a slowdown in Lowe's business in June but as a whole second quarter trends accelerated from the first quarter, the analyst said. Nevertheless, investors are overlooking near-term results in favor of 2019 when Ellison's leadership should start showing an impact on the business.

Price Action

Shares of Lowe's Companies were trading down about 1 percent to $99.68 Tuesday afternoon.

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