In the home retailer race, Lowe’s Cos. is falling behind.
“Lowe’s looks like Wile E. Coyote and Home Depot looks like the Road Runner once again,” Christopher Horvers, retail-hardlines analyst for JPMorgan Chase, told CNBC’s “Squawk on the Street.”
Horvers’ observation comes after Lowe’s lowered its guidance for 2012on Monday, causing shares to fall more than double that of Home Depot shares following its own weaker-than-expected earnings report.
The performance gap between Lowe’s and Home Depot , measured by comparable same-store sales, also known as “comps,” did get wider last quarter, according to Daniel Binder, analyst for Jefferies.
“The comp gap was over 3 points, which is higher than we’ve seen in recent quarters,” said Binder, during the same interview. “It’s not a good-looking picture for Lowe’s.”
Late last year, Lowe’s decided to move away from promotions to everyday low prices. The strategy, both Binder and Horvers agree, caused sales to struggle more than they already would have in a depressed housing market.
“They need to really sharpen their strategy around big-ticket, around promotions, get the right product in there, and then maybe later in the summer it’s a name you start to take a look at,” added Horvers.
Horvers has a “neutral” rating on Lowe’s, with a $31 price target — for which he’s prepared to wait.
“With turnarounds in retail you have to be very patient. You get out of the way for the hard part, and then you own it when things start to get better,” added Horvers. “We're in the hard part now with Lowe’s.”
As spring-related sales slow, both analysts are anticipating things to get worse before they get better.
“I think you probably just got the best comp for the year, and I agree with Chris. From here, you’ll get deceleration,” said Binder.
—By CNBC’s Jennifer Leigh Parker
Additional News: Lowe’s Cuts Profit Outlook; Shares Fall
Additional Views: Analyst Prefers Home Depot Over Lowe’s
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Neither Christopher Horvers nor Daniel Binder own LOW or HD shares. Horvers’ firm, JPMorgan, acted as lead or co-manager in a public offering of equity and/or debt securities for Lowe’s within the past 12 months, and has received compensation in that time from the company.
Follow Jennifer Leigh Parker on Twitter @jparker741.