On Monday, Lowe's reported a quarterly profit that beat Wall Street's estimates and raised its full-year sales forecast.
"The company is starting to perform pretty well and has probably some brighter skies ahead of it," said Budd Bugatch, a managing director at Raymond James & Associates.
During the quarter, Lowe's same-store sales lagged those of rival Home Depot for the 14th straight quarter. But Bugatch thinks this trend could reverse by mid-2013.
Both Lowe's and Home Depot shares are now both selling within a couple of basis points in terms of their forward earnings multiples, Bugatch said. Both stocks trade near 22 times earnings. He downgraded his rating on Home Depot shares to "neutral" last week. He is also neutral on Lowe's shares.
"They're both terrific companies, but the market is already granting a lot of that improvement in the stock price in our view," he said.
Lowe's earnings were boosted by sales tied to super storm Sandy, which hit just days before the end of the third quarter. Bugatch stressed that determining the financial impact on Lowe's sales would be difficult.
"I think that the way you should look at it quite frankly is that this is going to be an extended impact of rebuilding and seeing that in the numbers is going to be ... very hard to quantify and it's going to happen over an extended period of time into 2013," he said.
—By CNBC.com's Katie Little; Follow Her on Twitter @katie_little
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Raymond James & Associates received non-investment banking securities-related compensation from Lowe's within the past 12 months. The covering analyst and/or research associate owns shares of the common stock of Home Depot and Wal-Mart Stores.