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Louisiana-Pacific Corp. Message Board

  • margretbar2 margretbar2 Aug 6, 2009 10:11 AM Flag

    LPX Upgrade target $9.00

    07:49 EDT LPX Louisiana Pacific upgraded to Outperform from Underperform at Credit Suisse
    Credit Suisse upgraded Louisiana Pacific citing improved free cash flow and cost controls. Target to $9

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    • lpx just caught my attention today.. see a low of , quite a run..that said. seem's to have some good momentum and a significant amount of call interest. sept and nov. looks to me like this could run to 10.00..jmho

    • More specifically:

      • Who Owns the Upside? - Until we saw Louisiana-Pacific's balance sheet improvement during the second quarter, we
      questioned whether the current shareholders would receive just some or even none of the next upcycle's cash flow given the
      11 straight quarters of negative EBITDA and liquidity concerns. With a return to "net cash," a $50-$70 million 3-year available
      (but expensive) revolver, nearly $400 million in gross cash, and less than $125 million in debt due before 2017, we say that
      today's shareholders (and warrant holders) own this upside!
      • Up to a $152 Million "Call Option" - LPX is suing the banks/brokers involved in selling it the now-illiquid $152 million in auctionrate
      securities that have been written down to $25 million (even though almost all of these securities are current on their
      stipulated distributions). We believe LPX could draw a settlement that brings in more than the current carrying value - while
      further enhancing liquidity.
      • The "Other Side" Could be Huge - LPX's main product, oriented strand board (OSB) panels used as the inner of "siding" in
      houses and other structures, is extremely volatile. After bumping along at depressed levels from 2002 through Memorial Day
      2003, OSB tripled in price in less than 6 months. Our $2.15 "next peak" estimate assumes a $282/msf average OSB price,
      12% less than the 2004 $321/msf average level when LPX made $4.35.
      • Don't Forget the Calendar - Two facts matter: first, spring follows winter and, second, LPX's stock has ALWAYS gone up (for
      35 of 35 possible periods) from its October low to the first half of the following year. There are no exceptions going back to
      LPX's January 1973 spinoff from Georgia-Pacific. Our one-year target price is now $9, up from $4, and we are upgrading the
      stock rating to Outperform from Underperform.

      • 1 Reply to ubscibc
      • Better watch your stops...
        Take profit while you can
        clearly a candidate to short if price rises above 7

        behaves similar to all the car parts stocks, TEN,AXL,TRW, DAN... CFC ended and stocks are heading south. What will happen if the gvt support for housing ends in Nov.

        with correction in the market imminent i would not go long in this anymore.

        I like LPX though from a trading perspective... good to play the swings

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