Lumber Liquidators' Stock Gains After An Analyst Upgrade

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Lumber Liquidators' stock rallied 3.2% in premarket trade Tuesday, after Janney Capital Markets upgraded the hardwood floors retailer on the belief that fears related to a negative "60 Minutes" report are overblown. Analyst David Strasser raised his rating to buy from neutral and kept his fair value estimate for the stock at $47, which is 21% above Monday's closing price of $38.83. The stock had tumbled 44% over the past four sessions to close Monday at the lowest level since July 2012, as a “60 Minutes” report alleged the company installed Chinese-made laminate flooring that contained far higher-than-accepted levels of formaldehyde, a chemical known to cause cancer. Strasser highlighted Lumber Liquidators' compliance efforts, and said he was "satisfied" that the company is compliant with California Air Resources Board standards. Regarding the "60 Minutes" report, Strasser wrote in a note to clients: "It didn't highlight victims, had no feed back from regulators and relied on anonymous Chinese factory workers making accusatory statements." Strasser acknowledged, however, that the sales impact from bad publicity is unknown.

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