Lowe's (LOW) is aiming for $1 billion in productivity gains in fiscal 2026, a level the company expects will help offset higher cost inflation and continued investments in strategic initiatives, RBC Capital Markets said Wednesday in a report.

Management's 2026 adjusted operating-margin guidance of 11.6% to 11.8% trailed Wall Street's 11.9% consensus, suggesting estimates will drift lower, RBC said.

RBC cut its Q1 comparable sales growth estimate to 0.5% from 2% and trimmed its adjusted earnings per share forecast to $2.96 from $3.08. In the full year, RBC expects comparable sales growth of 0.9%, down from 2.1% previously, and adjusted EPS of $12.59, down from $12.85.

The home-improvement backdrop remains soft, with management pointing to continued consumer weakness and elevated mortgage rates as reasons the business is likely to improve only gradually, RBC said.

RBC raised its price target on Lowe's stock to $264 from $257 and maintained its sector perform rating.

Price: 262.44, Change: -0.58, Percent Change: -0.22