KeyBanc Initiates Lumber Liquidators (LL) with a Buy
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KeyBanc initiates coverage on Lumber Liquidators (NYSE: LL) with a Buy rating and a $18 price target.
The firm sees a competitive advantage in Lumber Liquidators' "focused product assortment, discount prices, low-cost real estate, direct from the mill sourcing, and good customer service." The company had 125 stores at the end of 1Q08 and with the potential for 300 stores long term, KeyBanc believes that over the next five years the company can maintain unit growth of 20% or greater. Overall, the firm expects 20% EPS growth or greater over a three- to five-year horizon.
The firm said, "While we believe there could be volatility and potentially downside to our estimates in 2008 and 2009, we are encouraged by the Company's execution thus far in this more difficult environment. Trading at a multiple that is similar to more mature retailers, we view the valuation as compelling. We have an affinity to growth stocks that trade at attractive valuations, which we believe is the case for Lumber Liquidators."
Lumber Liquidators, Inc. operates as a specialty retailer of hardwood flooring in the United States and the United Kingdom.
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