Key Takeaways:
- Lowe's launched HomeCare+, a $99 annual subscription for home maintenance tasks
- Jefferies reaffirmed Lowe's as a top pick with a $278 price target
- Shares trade at $207.73, down nearly 14% year-to-date
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Lowe's launches $99 subscription service as Jefferies backs stock with $278 target
Lowe's launched a $99 annual home maintenance subscription, with Jefferies analysts backing the stock with a $278 price target.
"HomeCare+ is solving an unmet need for new Gen-Z and millennial homeowners, middle-aged professionals, and aging Boomers," a team of Jefferies analysts wrote in a note Thursday.
The $99 subscription covers two annual visits for tasks including changing light bulbs, cleaning electric dryer vents, replacing HVAC air filters, and lubricating garage doors. Subscribers also receive a 5% discount on products needed for the services. Lowe's ran a pilot program for about a year before the March launch and is "pleased with the customer response," a company spokesperson said, declining to share enrollment figures.
The service targets a gap in the market for homeowners who lack the time or ability to handle small repairs, said Todd Luong, a real estate agent with Re/Max DFW Associates. "They've been renting their whole lives and they're used to just calling the landlord any time something breaks," he said.
Lowe's shares have fallen nearly 14% this year to $207.73, pressured by a sluggish housing market. Higher mortgage rates and limited inventory have kept home sales subdued, reducing spending on improvement projects. Jefferies analysts said smaller, do-it-yourself projects will lead the eventual housing recovery, which positions Lowe's favorably.
The analysts expect large, contractor-assisted projects to be increasingly deferred as job security concerns and rising labor costs weigh on upper-middle-income homeowners. Lowe's subscription model offers a recurring revenue stream that is less tied to the housing cycle.
The subscription service gives Lowe's a new recurring revenue stream that could help offset weakness in larger project spending. Investors will watch the company's next quarterly report for early adoption metrics on HomeCare+.
This article is for informational purposes only and does not constitute investment advice.
