Goldman Sachs Starts Weyerhaeuser (WY) at Conviciton Buy
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(Updated - September 22, 2016 9:04 AM EDT)
Goldman Sachs initiated coverage on Weyerhaeuser (NYSE: WY) with a Conviction Buy rating and a price target of $37. The price target implies 22% upside. Analyst Brian Maguire highlighted its unique Timberlands assets, supercycle potential, and its attractive dividend.
"WY ($23bn market cap) is our top pick in the US Paper & Forest products coverage with a Buy rating and 22% upside to our 12month price target of $37. We view WY as the only way for investors to get exposure to the attractive Timberland asset class via a liquid large-cap publicly-traded equity. Following a portfolio transformation since CEO Doyle Simmons took over in 2013, we estimate that 75% of WY’s enterprise value today is from its ownership of 13.2mn acres of US Timberlands," said Maguire.
The analyst added, "While past performance is not an indicator of future results, we note that over the last 20 years Timberland values: 1) Outperformed the S&P 500 (7.5% CAGR vs. 5.9% for the S&P 500) on a $/acre basis; 2) Had almost no correlation (0.04) with the S&P 500; and 3) Were more stable than the S&P 500 (annualized volatility of 5.4% vs. 16.6% for the S&P 500) with much shallower draw-downs. We expect continued appreciation in US Timberland values to be a key driver of WY’s stock price."
Shares of Weyerhaeuser closed at $30.34 yesterday.
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