Oppenheimer initiated research coverage of Lumber Liquidators on Thursday with a downbeat assessment of the wood flooring company, saying the worst may not be over for the stock. Analyst Brian Nagel placed a perform rating on the stock. He believes cash flow is likely to turn negative, as the recent allegations of unsafe laminate flooring made in China have shaken consumer confidence and undermined a key sales and margin driver for the company. He believes consensus analyst earnings expectations are still too optimistic, and "the valuation of shares has yet to reach levels characteristic of investor capitulation." He believes Lumber Liquidators' shares could trade down to the low-to-mid-$20s before setting up for a prolonged recovery. The stock, which was still inactive in premarket trade, closed Wednesday at $26.49, the lowest level since April 25, 2012. It has plunged 61% since word of the unsafe China-made flooring made the rounds.
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