Why Did Oppenheimer Upgrade Lumber Liquidators’ Stock?

By Carrie Williams

In a report released today, Brian Nagel from Oppenheimer upgraded Lumber Liquidators (NYSE: LL) to Buy, with a price target of $34. The company’s shares closed yesterday at $26.21, close to its 52-week high of $26.90.

Nagel observed:

“We are lifting our rating on Lumber Liquidators from Perform to Outperform and establishing a price target of $34. In early 2015, LL began to encounter a number of operational and legal challenges that would ultimately weigh meaningfully upon the company’s results. We recently undertook a significant “fresh look” at LL. We come away with the opinion that now, under the leadership of a new senior management team, following a period of pronounced retrenchment, and with healthy sector tailwinds still in place, a potentially prolonged recovery at Lumber Liquidators is starting to take shape. Successful, small-cap turnaround plays have tended to make for some of the best retail stocks.”

According to TipRanks.com, Nagel is a 3-star analyst with an average return of 1.4% and a 50.2% success rate. Nagel covers the Services sector, focusing on stocks such as Restoration Hardware Holdings Inc, Dick’s Sporting Goods, and Advance Auto Parts.

Currently, the analyst consensus on Lumber Liquidators is Moderate Buy and the average price target is $25, representing a -4.6% downside.

In a report issued on May 10, Wedbush also upgraded the stock to Buy.

Based on Lumber Liquidators’ latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $248 million and GAAP net loss of $26.37 million. In comparison, last year the company earned revenue of $234 million and had a GAAP net loss of $32.4 million.

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Lumber Liquidators Holdings, Inc. is a multi channel specialty retailer of hardwood flooring and hardwood flooring enhancements and accessories in the U.S. It offers exotic and domestic hardwood species, engineered hardwood, laminate, vinyl plank, bamboo and cork direct to the consumer. It also provides a wide selection of flooring enhancements and accessories, including moldings, noise reducing underlay, adhesives and flooring tools. The company was founded by Thomas David Sullivan in 1994 and is headquartered in Toano, VA.