UPDATE: J.P. Morgan Upgrades Lowe's on Improving Execution

In a report published Thursday, J.P. Morgan analyst Christopher Horvers upgraded Lowe's LOW from Neutral to Overweight, and raised the price target from $44.00 to $52.00.

In the report, J.P. Morgan noted, “We are upgrading LOW to Overweight from Neutral as we believe improving execution is becoming evident in stores and this should lead to more consistent financial results in light of the solid rebound in home-related spending. Combined with margin drivers and the commitment to compound profit expansion via incremental debt/buyback (2.15x rent adjusted leverage target), we now expect 20% EPS growth in 2013 and 25% in 2014. Moreover, at 17x our 2014 forecast, LOW is trading below a 1.0x PEG vs. the group average/median of 1.3x (and only one of five names in our 22 stock coverage below 1.0x). Additionally, LOW offers a 10% buyback/dividend yield. Tactically, we believe a solid 2Q comp and reiteration of its value improvement targets (i.e., substantially finishing the resets by year-end with a MSD comp and 100-bp gross margin lift) are likely to ratchet the stock up to the next level. Finally, in our view, we remain in the early stages of a sustained accelerated EPS growth phase for LOW (and HD as well). Indeed, the company is targeting $3.44 in EPS by 2015 (or 65% higher than our current 2013 estimate).”

Lowe's closed on Wednesday at $44.30.