Lowe's Companies, Inc. (LOW) shares moved marginally lower on Monday morning after the company announced plans to close more than 50 underperforming stores. Management expects that the move will have an impact of $0.28 to $0.34 on earnings per share during the fiscal year ending Feb. 1, 2019. Shares of The Home Depot, Inc. (HD) moved marginally higher on the news, as it could gain market share in those areas across the United States and Canada.
Lowe's stock moved sharply lower over the past month along with the wider market sell-off. While the housing market remains a key concern with rising interest rates, some analysts are bullish on the home improvement retailer's future. Citi's Kate McShane is confident that management's turnaround plan will boost shares and upgraded the stock in late October to a Buy with a price target of $112.00 per share. Traders will be keeping a close eye on Lowe's ahead of its investor day event that is slated for Dec. 21, when announcements could introduce volatility to the stock.
From a technical standpoint, Lowe's stock moved sharply lower throughout October before rebounding slightly during the end of the month. The relative strength index (RSI) moved slightly above oversold levels with a reading of 37.46, while the moving average convergence divergence (MACD) could see a near-term bullish crossover that spells further upside ahead.
Traders should watch for the 200-day moving average to hold at around $96.28 and a potential move toward the 50-day moving average at $106.85 to close the gap from mid-August. If the stock breaks down from these levels, traders could see a continued move lower to retest the prior low set around $85.00 made during the summer of this year.
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.