Morgan Stanley’s Insight on Home Improvement Giants: Lowe’s vs. Home Depot

Key Insights

• Morgan Stanley continues to favor both Lowe’s and Home Depot, maintaining "overweight" ratings despite a cautious outlook.
• The firm’s price projections indicate a slightly stronger potential for Lowe’s shares compared to Home Depot, though both fall short of the broader market expectations.
• The home improvement sector faces ongoing challenges as elevated interest rates and a slow housing market dampen enthusiasm for large-scale renovation projects.

After the latest earnings announcements, Morgan Stanley analysts remain cautiously optimistic about the prospects of two leading home improvement retailers: Lowe’s and Home Depot. While the competition is tight, neither company is expected to deliver substantial gains in the near future.

The investment bank has reaffirmed "overweight" ratings on both stocks, assigning a price target of $255 for Lowe’s, which suggests an upside of approximately 8.8%, and $410 for Home Depot, reflecting about a 7.7% potential increase. These targets are based on recent closing prices just before the earnings releases.

Analysts praised Lowe’s for its strong management and noted that Home Depot’s performance has been steadily improving since March. However, they caution that significant growth is unlikely in the short term due to a slowdown in major home renovation projects, influenced by persistently high interest rates and a sluggish housing market.

Both companies’ shares dipped slightly following earnings announcements amid modest market movements. Morgan Stanley’s price targets remain somewhat conservative compared to Wall Street consensus, highlighting the sector’s current headwinds.

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