Lumber Liquidators Holdings Inc LL was described by Oppenheimer in May 2017 as being one of the most compelling turnaround stories in the small-cap hardliners retail space, and the firm's view hasn't changed much since.
The Analyst
Oppenheimer's Brian Nagel maintains an Outperform rating on Lumber Liquidators' stock with an unchanged $43 price target.
The Thesis
Shares of Lumber Liquidators were under heavy selling pressure Monday after Wedbush downgraded the stock from Outperform to Neutral ahead of its fourth-quarter report Feb. 27 — a call which Oppenheimer disagrees with.
Lumber Liquidators could report a "lackluster" earnings report later this month, but Nagel said in a Tuesday note he would be "hard-pressed" to conclude that the company's recovery is derailed. Three factors support the stance, the analyst said:
Commentary on the third-quarter conference call made it clear the underlying operational and financial structure of Lumber Liquidators' supply chain improved significantly.
Management guided a mid-to-upper single digit comp gain in Q4.
The overall flooring sector continues to see solid demand, as evidenced by outsized growth in the carpet and other floor coverings category.
Lumber Liquidators could offer a guidance outlook for 2018 that would give Nagel the opportunity to "better reassess our call on the shares from here," he said.
Price Action
Shares of Lumber Liquidators were plunging nearly 6 percent to $23.03 at the time of publication Tuesday morning.
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