Last month, Lowe's Companies Inc (NYSE:LOW) reported mixed results for its fiscal second quarter.

According to Oppenheimer, the Federal Reserve's previous easing cycles suggest that demand in the home improvement sector tends to improve, though there is a "potentially substantial lag."

Analyst Brian Nagel upgraded Lowe's Companies' rating from Perform to Outperform and raised the price target from $230 to $305.

The Lowe's Companies Thesis: As lending rates moderate, there is stronger demand for home-related items, which points towards strengthening sales at the company beginning later in 2025, Nagel said in the upgrade note.

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Lowe's comp store sales are likely to remain negative through the first half of 2025, "reflecting continued, post-pandemic demand dislocations in the sector and potentially delayed benefits of moderating rates," the analyst said.

"Our interpretation of market sentiment suggests that investors are apt to increasingly 'look through' nearer-term fundamental weakness at the chains" and could have a longer-term approach for the shares of Lowe's and Home Depot Inc (NYSE:HD).

LOW Price Action: Shares of Lowe's Companies were up 0.63% to $263.94 at the time of publication Tuesday.

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