UBS Warburg Downgrades Lowes to 'Buy'
UBS Warburg downgraded Lowes (LOW ) and Home Depot (HD ) to buy from strong buy.
Analyst Aram Rubinson says these excellent companies both are enjoying an economic upturn, but there's little either can do to surprise the Street at this point. He notes retail stocks have outperformed since October 2000, and the government has upwardly revised its fourth quarter 2001 gross domestic product estimate.
Rubinson believes other areas of the economy are set to gain relative steam. He has become more conservative on his outlook for price-to-earnings expansion in the retail group. Given accelerating fundamentals, the still-low rate environment, and solid homebuilder fundamentals, Rubinson say he supports Lowes and Home Depot at buy; he cut the $59 Lowes target to $52, and cut the $60 Home Depot target to $55-$57.