DA Davidson Upgrades Potlatch (PCH) to Buy, Offers 22% in Potential Return
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Price: $41.73 --0%
Rating Summary:
4 Buy, 8 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
4 Buy, 8 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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DA Davidson upgraded shares of Potlatch (NASDAQ: PCH) to a Buy rating from its previous rating of Neutral and reiterated its price target of $38.
The firm notes that the stocks recent weakness allows for potential return of up to 22 percent, 16 percent from equity upside plus an additional 6 percent in dividend yield. DA Davidson claims that the shares are down due to the overall weakness in the market and the implications for housing, which ultimately is a significant determinant of log demand.
The company's 6 percent dividend yield is much larger than other timber REIT companies. PCH continued to payout its $2.04 annual dividend throughout the economic downturn by selling off non-core timberlands, but is running out of land to sell.
An analyst at DA Davidson notes that they are positive on shares of PCH for two reasons, "One, the company is currently trading at a 29% discount to its Net Asset Value (calculated at $46.31), which tends to be a good entry point for Timber REITs. Two, there is significant and growing capital looking at the asset class, which should enable Potlatch to monetize assets in the best interest of shareholders. We believe a 6% yield is attractive and sustainable long enough to see which way the axe swings."
DA Davidson's FY11 EPS and revenue estimates are $1.06 and $511.2 million while its FY12 estimates are $1.33 and $563.3 million.
For more ratings news on Potlatch click here and for the rating history of Potlatch click here.
Shares of Potlatch closed at $32.74 yesterday.
The firm notes that the stocks recent weakness allows for potential return of up to 22 percent, 16 percent from equity upside plus an additional 6 percent in dividend yield. DA Davidson claims that the shares are down due to the overall weakness in the market and the implications for housing, which ultimately is a significant determinant of log demand.
The company's 6 percent dividend yield is much larger than other timber REIT companies. PCH continued to payout its $2.04 annual dividend throughout the economic downturn by selling off non-core timberlands, but is running out of land to sell.
An analyst at DA Davidson notes that they are positive on shares of PCH for two reasons, "One, the company is currently trading at a 29% discount to its Net Asset Value (calculated at $46.31), which tends to be a good entry point for Timber REITs. Two, there is significant and growing capital looking at the asset class, which should enable Potlatch to monetize assets in the best interest of shareholders. We believe a 6% yield is attractive and sustainable long enough to see which way the axe swings."
DA Davidson's FY11 EPS and revenue estimates are $1.06 and $511.2 million while its FY12 estimates are $1.33 and $563.3 million.
For more ratings news on Potlatch click here and for the rating history of Potlatch click here.
Shares of Potlatch closed at $32.74 yesterday.
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