In a report published Tuesday, Credit Suisse analyst Seth Sigman projected how shares of Lumber Liquidators Holdings Inc (NYSE: LL) would react if the weaker sales trend seen in March following the "60 Minutes" segment carries over to the rest of the year.
Sigman argued that this is "prudent" given the uncertainty around how consumers will continue to react towards the negative press. The analyst added that survey results suggested that with better research to alleviate the safety concerns on the company's products and with more domestic sourcing, there would be a willingness by consumers to return to stores.
Nevertheless, Sigman lowered his 2015 earnings per share estimates to $1.63 from a prior estimate of $2.64, as he lowered his comp estimate from +5.0 percent to -1.7 percent. The analyst also lowered his gross margin estimate by 130 basis points to 38.2 percent, based on the mix implications from lower sales of laminate products as well as the risk of greater discounting.
Sigman noted that he will continue monitoring stores and specifically sales associates' ability to communicate the company's message from its conference call on Thursday that the company is in compliance with current standards.
Shares are Neutral rated with a price target lowered to $40 (from a previous $55) based on an approximate 17x multiple on 2016 earnings per share estimate of $2.29.
Latest Ratings for LL
| Mar 2015 | Goldman Sachs | Downgrades | Buy | Neutral |
| Mar 2015 | Jefferies | Maintains | Hold | |
| Mar 2015 | Janney Capital | Upgrades | Neutral | Buy |
View More Analyst Ratings for LL
View the Latest Analyst Ratings
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