KeyBanc lifts La-Z-Boy stock rating, sees over 50% upside

On Friday, KeyBanc Capital Markets upgraded La-Z-Boy (NYSE:LZB) shares from Sector Weight to Overweight, setting a price target of $46.00. The firm highlighted the company’s strong financial position, including $317.2 million in net cash, which accounts for 20% of its current market capitalization, and the absence of outstanding debt. La-Z-Boy’s stock is currently valued at $38.54, having declined 20% from its January 30, 2025, high of approximately $48. According to InvestingPro analysis, the company shows strong financial health with an overall score of 2.46 out of 4, particularly excelling in cash flow management with a score of 3.02.

La-Z-Boy, a leading vertically integrated producer, manufacturer, and retailer, primarily focuses on upholstered furniture. KeyBanc analysts pointed out that the stock trades at 6.0 times their 2026 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) estimate. This valuation is below the 10-year average of 7.9 times and represents one of the lowest valuations in the furniture and furnishings sector covered by KeyBanc. The company’s shares are also trading at 11.9 times KeyBanc’s 2026 earnings per share (EPS) estimate, compared to the 10-year average price-to-earnings (P/E) ratio of 14 times. InvestingPro data reveals the company has maintained dividend payments for 14 consecutive years, with a current dividend yield of 2.28%. Get access to 10+ exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.

The research firm anticipates that over the next two years, La-Z-Boy’s multiple could expand beyond its recent high and reach 15 times, potentially leading to a 25% upside from multiple expansion alone. Furthermore, KeyBanc believes that as home-related spending recovers, underlying sales and EPS for La-Z-Boy could see additional growth, presenting the possibility for more than a 50% increase in share value over the next two to three years. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels, with strong fundamentals including a healthy gross profit margin of 43.78% and return on equity of 12%.

KeyBanc also noted significant growth opportunities for La-Z-Boy through the consolidation of its independent dealer network, which comprises 45% of La-Z-Boy stores, and the expansion of its e-commerce brand, Joybird. The firm suggests that the market is currently undervaluing these aspects of La-Z-Boy’s business strategy. For deeper insights into La-Z-Boy’s growth potential and comprehensive analysis, access the detailed Pro Research Report available exclusively on InvestingPro, covering over 1,400 top US stocks.

In other recent news, La-Z-Boy Incorporated reported its first-quarter earnings for 2025, revealing a mixed performance. The company’s earnings per share (EPS) came in at $0.68, slightly below the anticipated $0.70, while revenue surpassed expectations, reaching $522 million against the forecasted $512.27 million. This represents a 4% increase in consolidated sales year-over-year. Despite the EPS miss, La-Z-Boy’s revenue growth indicates robust performance in a challenging market. The company plans to expand its store network, with 5-7 new store openings expected in the fourth quarter, contributing to a total of 14-16 new store openings for the year. Additionally, La-Z-Boy’s non-GAAP operating margin improved by 20 basis points to 6.8%. The company also saw an 18% increase in cash from operating activities, totaling $57 million. Analysts from firms such as KeyBanc Capital and Raymond (NSE:RYMD) James have shown interest in La-Z-Boy’s strategic partnerships and margin improvements, indicating a focus on future growth potential.

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