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Lumber Liquidators shares jump 4% premarket on news of China claims settlement

Shares of Lumber Liquidators Holdings Inc. LL, +0.66% jumped 4.4% in premarket trade Wednesday, after the company said it has signed a memorandum of understanding to settle claims related to Chinese laminated wood flooring that it previously sold. The company will pay $22 million in cash and another $14 million in store credit vouchers to settle claims brought on behalf of buyers of the flooring, which was found to contain a carcinogen. SunTrust Robinson Humphrey analysts said the news would remove an overhang on the stock. "This settlement will put the company past an issue that has been a public relations problem and a time consumer for management," analyst Keith Hughes wrote in a note. "Regardless, we believe this has been anticipated by investors for sometime, as the company has made progress on other legal issues." SunTrust has a $33 stock price target on Lumber Liquidators, which closed Tuesday at $34.88. Shares have gained 122% in 2017, while the S&P 500 SPX, +0.16% has gained 15%.


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