business

UBS Downgrades La-Z Boy

Analyst Margaret Whelan believe the furniture maker will see further deflation in 2005

UBS Financial downgrades La-Z Boy (LZB ) to reduce from neutral.

Analyst Margaret Whelan says La-Z Boy is up 19.1% from the year low of $12.75, while the company's earnings per share has fallen 21% on a trailing 12-month basis. She says, while the fall is usually strong for furniture sales, U.S. manufacturers haven't seen an improvement. She thinks they continue to lose market share to high value and lower cost imports.

Moreover, says with the tariff on bedroom furniture at just 8.6% and more capacity in locations such as Vietnam coming online, she expects further deflation in 2005.

Whelan maintains 73 cents fiscal 2005 (ending April) earnings per share and 90 cents fiscal 2006 estimates. However, she cuts the $13 price target to $10.

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