Louisiana Pacific Drops On Downgrade, And Market Cycles Point Even Lower

Summary:

• Shares of Louisiana-Pacific Corporation LPX dropped sharply on Wednesday, trading over 4 percent lower.
• Merrill Lynch downgraded the building materials manufacturer from Buy to Neutral.
• The stock’s reliable market cycles suggest additional downside risk into the new year.

Louisiana-Pacific Corporation Stock Weekly Chart

Stock analyst George Staphos of Bank of America Merrill Lynch reduced his target for Louisiana-Pacific to $24, having downgraded its rating from Buy to Neutral. Staphos noted his expectation for consensus to begin to account for the decline in prices for the panels in the latter half of 2018.

Our analysis of the market cycles for the stock shows that it remains in the declining phase of its current cycle. This is occurring in a stock that has whose cycles have proven to be reliable in the recent past, along with timely candlestick signals.

Our view is decidedly negative, as shares have broken below the point at which it started its current intermediate cycle. The timing is suggestive of a decline into mid-February. Our target is near $18.

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