Goldman Sachs Downgrades Lumber Liquidators (LL) to Sell; Fundamentals Eroding

(Updated - December 17, 2015 8:37 AM EST)

Goldman Sachs downgraded Lumber Liquidators (NYSE: LL) from Neutral to Sell with a price target of $13.00.

Analyst Matthew Fassler said, "We believe that eroding fundamental trends evident even prior to the firm's recent reputational challenges related to the origin and composition of imported woods and laminates will recover gradually, but we think to a degree that is more than priced into current valuation."

He added, "Our valuation has always been based on underlying fundamentals rather than on concerns about contingent liabilities, though we note our downgrade comes after a recent bounce in the stock and is made in the context of our Neutral coverage view."

The firm is positioned below consensus for each of the next two quarters and for each of 2016/2017.

"We expect the gradual pace of any recovery to indicate that the path to earnings that would support the current stock price is a long one. The combination of depressed margins, brand impairment for a firm that banked heavily on marketing, stiff competition from growing specialty players and from HD/LOW, and ongoing store growth in the context of challenged fundamentals keeps us guarded."

For an analyst ratings summary and ratings history on Lumber Liquidators click here. For more ratings news on Lumber Liquidators click here.

Shares of Lumber Liquidators closed at $18.68 yesterday.

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