11:23 AM EDT, 09/24/2024 (MT Newswires) -- Home improvement retailers Lowe's (LOW) and Home Depot ( HD ) likely won't return to positive comparable sales growth until the second half of 2025 as it may take substantial time for reduced interest rates to buoy consumer spending, Oppenheimer said Tuesday.

Same-store sales for the two companies are expected to remain in negative territory through the first half of 2025 due to "post-pandemic demand dislocations in the sector and potentially delayed benefits of moderating rates," according to a group of Oppenheimer analysts, including Brian Nagel.

Last week, the Federal Reserve reduced benchmark rates by 50 basis points.

Investors are likely to look through near-term fundamental weakness at the chains, with sales expected to strengthen in 2025, Nagel said. Moderating interest rates tend to "underpin stronger demand for home-related items, but often with a substantial lag," according to the Oppenheimer note.

Oppenheimer upgraded Lowe's to outperform from perform and raised its price target to $305 from $230. Home Depot's ( HD ) target was raised to $400 from $345 while Nagel reiterated a perform rating.

For fiscal 2025, the analysts lowered their forecast for Lowe's earnings per share to $11.85 from $13.10, putting Oppenheimer below the $12.66 consensus. The brokerage is modeling fiscal 2026 EPS of $13.30, below Wall Street's $13.82 view.

For Home Depot ( HD ), Oppenheimer reduced its fiscal 2025 EPS forecast to $14.93 from $15.70, putting it below the $15.67 consensus. It is modeling fiscal 2026 EPS of $15.99, below the market's $17.06 estimate.

There remains a potential for downside risk to Street forecasts over the near term, Nagel wrote.

Price: 264.82, Change: +2.52, Percent Change: +0.96