Lumber Liquidators stock was downgraded by analysts to “underweight” Jan. 21, causing its shares to fall 10%, according to MarketWatch.
The company has struggled to rebound from a 2015 formaldehyde scandal that sent its shares plummeting, and it is still in the midst of revamping its brand. The analysis from Morgan Stanley suggested Lumber Liquidators should make bigger strides in mending its image, including taking on a fresh name.
“We would reassess our rating if LL overhauls its brand more comprehensively than the current transformation plan suggests (including a potential name change for the company),” the analysis stated, according to MarketWatch.
The analysis added that Lumber Liquidators is facing “intensifying” competition from Floor & Décor, which saw shares rise 51% in the past 12 months, according to the report; Lumber Liquidators’ shares dropped 26% in the same time frame.
In 2018, Lumber Liquidators settled a $36 million class-action lawsuit related to its Chinese-made laminate flooring’s formaldehyde issues; the company paid $33 million for misleading investors during the scandal in May 2019.
