Lowe's (LOW) should see outsize gains on its stock as the home improvement market recovers, even if some of the company's strategies don't work, UBS said in a note emailed Thursday.
"Lowe's stands in a good spot," UBS wrote, citing the company's sound track record in revamping its systems, supply chain, store experience, culture, and merchandising.
The efforts have led to share gains, especially in the pro segment which contributes roughly one third of the company's sales as compared to 19% a few years ago, the firm said.
UBS also noted that the stock had the potential for double-digit earnings per share growth, with the company showing discipline and flexibility in how it does business.
"All of Lowe's strategies don't need to work in order for the stock to provide handsome returns," UBS said.
The company has built a strong foundation with which it is now enhancing its capabilities to build new points of differentiation, including by relaunching its pro loyalty program, UBS added.
UBS maintained its buy rating and a price target of $300 on the stock.
Price: 263.53, Change: -4.37, Percent Change: -1.63
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