CIBC World keeps the sector outperform rating on Lowe's (LOW).
Analyst Daniel Wewer says second-quarter earnings per share is 2 cents below his and the consensus estimate of 91 cents, mostly on a shortfall in same-store sales growth during the second quarter, which was 5.1%, vs. the guidance of 6% to 7%. He says sales trends weakened in June, following strength in May. But sales in July have rebounded, and this trend seems to be continuing in August, he says. He also notes the home-improvement retailer raised its third-quarter guidance, which now exceeds his 64 cents estimate.
Wewer says, while second-quarter earnings per share was bit weaker than plan, management's confidence in third-quarter prospects will have a favorable impact on the stock, in his view. He keeps the $2.74 fiscal 2005 (Jan) estimate, and the $3.46 fiscal 2006 estimates. He also keeps the $64 target.