This is How Bank of America Feels About Lowes and Home Depot

According to Bank of America, Lowe’s is an underdog.

Analyst Elizabeth Suzuki of Bank of America wrote in a recent note to clients, “We believe increasing housing market momentum and big ticket spending will provide support to LOW longer term, particularly as it begins to see benefit from its restructuring initiatives over time.”

The bank has reinstated its coverage on the company and gave it a buy rating as well as a $95 price target.

“We believe LOW’s profitability will also continue to improve and its comp gap with HD will continue to narrow as product differentiation and resets help drive comps,” wrote Suzuki.

The home improvement retailer has seen same-store sales climb 4.5% in its latest quarters.

Suzuki has referred to Lowes as the “cheaper but riskier name in home improvement.” The bank still believes Home Depot is the “leader” in the sector.

According to her, the company has room to grow in Mexico and Canada.

Suzuki has also reinstated coverage on Home Depot in another note and gave the stock a $170 price target with a buy rating.

“The macro backdrop for growth in home improvement spending is favorable, and HD is also well positioned to continue its solid track record of share gains,” Suzuki wrote.

“In order to compete with Amazon and brick-and-mortar retailers with exclusive smart-home products, HD will need to establish a dominant market position as the expert in home automation, which requires investment in sourcing initiatives, employee education, and marketing,” Suzuki said.

Disclaimer: We have no position in Home Depot Inc. (NYSE: HD) nor Lowe’s Companies, Inc. (NYSE: LOW) and have not been compensated for this article.