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Stock Analyst Update

The Week in Stocks: Lowe's Lets Down the Street (But Not Us)

Plus, Research in Motion stays on track, Barr notches win on Plan B, and more.

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Lowe's (LOW) reported second-quarter results that were spot-on with Morningstar analyst Anthony Chukumba's estimates. While the company reduced its full-year forecast slightly, Chukumba is leaving his fair value estimate unchanged. Net sales increased 12.2% from the year-earlier period, as comparable-store sales rose 3.3%. The comp increase was especially impressive given the negative second-quarter comp reported last week by Lowe's primary rival Home Depot (HD) and the fact that Lowe's was lapping a 6.5% comp jump from the same quarter of last year. Operating margins declined from 11.8% last year to 11.6%, mainly due to a lower gross margin. Chukumba is not surprised to see management reduce its sales and earnings guidance for the year, given the slowing housing market and higher gasoline prices. However, Lowe's wide economic moat and plentiful growth prospects remain intact.
 Full Analyst Report: Lowe's

Research in Motion on Track for Strong Second Half
Morningstar analyst John Slack weighs in on recent strength in Research in Motion (RIMM) shares. The change in sentiment follows on the heels of a slump in the device-makers' stock, which had languished amid concerns about its patent dispute settlement with NTP as well as nagging concerns about burgeoning competition. Despite the recent see-saw, Slack sees compelling signs--such as forthcoming product launches and evidence of high switching costs in the enterprise channel that RIM serves--that the business is tracking according to plan. As such, Slack is leaving his fair value estimate unchanged.
 Full Analyst Report: Research in Motion 

Jeffrey Ptak has a position in the following securities mentioned above: LOW. Find out about Morningstar’s editorial policies.