Lowe’s stock forecast as CEO lauds macro housing trends after Q3 beat

On Wednesday, Lowe’s Companies (NYSE:LOW) shares edged higher by 1.38% after announcing its most recent quarterly results. The company reported its fiscal third-quarter revenue and earnings before markets opened, beating the consensus for analyst expectations.

LOW posted fiscal third-quarter non-GAAP earnings per share of $2.73, beating the average analyst estimate of $2.34. In addition, its GAAP EPS of $2.73 outperformed the expectation of $2.28, while revenue for the quarter increased by 2.7% from the same quarter a year ago to $22.92 billion, surpassing Street estimates by $980 million.

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 Lowe’s CEO Marvin Ellison attributed the solid quarterly performance to favourable trends in the housing market, adding that these factors will continue to drive demand going forward.

Is it too late to buy Lowe’s stock?

From an investment perspective, Lowe’s shares trade at reasonable trailing 12-month and forward P/E ratios of 25.58 and 20.12, respectively. Therefore, the stock could be a compelling option for value investors.

Moreover, analysts expect its earnings per share to grow by more than 40% this year before rising at an average annual rate of about 18.65% over the next five years.

As such, long-term growth investors could also find LOW as an exciting option for their portfolios.

Technically, Lowe’s shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has rallied deep into overbought conditions, thus creating a perfect opportunity for a technical pullback.

Therefore, investors could target potential pullback profits at about $235.41, or lower at $224.78. On the other hand, if the bull-run continues, triggering a channel breakout, the stock could find resistance at about $255.45, or higher at $264.86.

Time for profit-takers to swoop in?

In summary, although Lowe’s shares offer exciting growth prospects at reasonable valuation multiples, the stock has recently rallied deep into overbought conditions, creating an opportunity to take profits.

Therefore, it could be time to sell the shares whilst the stock takes a breather after a long rally.

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