Thursday, Credit Suisse upgraded Louisiana-Pacific Corp. (LPX) shares to Outperform from Underperform and increased its price target to $9 from $4.
Analyst Dillon said that until he saw Louisiana-Pacific's balance sheet improvement during the second quarter, he 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, the analyst said that today's shareholders, and warrant holders, own this upside.
The analyst noted that LPX is suing the banks/brokers involved in selling it the now-illiquid $152 million in auction-rate securities that have been written down to $25 million, even though almost all of these securities are current on their stipulated distributions. The analyst believes LPX could draw a settlement that brings in more than the current carrying value, while further enhancing liquidity.
The analyst added that LPX's main product, oriented strand board, or 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.
The analyst's $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. Spring follows winter and, 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.
Currently, LPX is up $0.26 or 4.42% and trading at $6.14.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.