UBS on U.S. Paper & Forest Products: Upgrading LPX, WY & PCL on Valuation
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Price: $73.18 -0.77%
Rating Summary:
11 Buy, 7 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
11 Buy, 7 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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UBS on U.S. Paper & Forest Products: Upgrading LPX, WY & PCL on Valuation
UBS analyst says, "We are upgrading our ratings on Louisiana-Pacific (NYSE: LPX), Weyerhaeuser (NYSE: WY) and Plum Creek (NYSE: PCL) to Neutral from Sell on valuation. Our targets remain unchanged (LPX-$7.25 based on 7x a blend of 2011e/normalized EV/EBITDA; WY-$18 based on a blend of 8x 2011e EV/EBITDA and our estimate of underlying asset value ($23); and PCL-$36 based on a blend of estimated asset value ($44) and 11x 2011E EV/EBITDA). Even with 3-5% recovery on Tuesday, LPX and WY shares are 20-25% below recent highs and PCL shares are off c15% since late July. We retain our Sell rating on Potlatch (NYSE: PCH) (target unchanged at $30 based on a blend of 10x 2011e EV/EBITDA & our estimate of underlying asset value ($35/sh))."
"Expectations getting more realistic, but no quick fix for US housing - We remain cautious on the near-to-medium term outlook for US housing, the key driver for LPX, PCL and WY’s profitability. But we believe current valuations and expectations (both industry and financial market) have come into better balance with fundamentals."
"Still cautious on housing-exposed companies/favor paper-based packaging -
We see relatively limited downside risk in LPX, PCL and WY at current valuations, barring a material leg down in already-depressed housing activity."
UBS analyst says, "We are upgrading our ratings on Louisiana-Pacific (NYSE: LPX), Weyerhaeuser (NYSE: WY) and Plum Creek (NYSE: PCL) to Neutral from Sell on valuation. Our targets remain unchanged (LPX-$7.25 based on 7x a blend of 2011e/normalized EV/EBITDA; WY-$18 based on a blend of 8x 2011e EV/EBITDA and our estimate of underlying asset value ($23); and PCL-$36 based on a blend of estimated asset value ($44) and 11x 2011E EV/EBITDA). Even with 3-5% recovery on Tuesday, LPX and WY shares are 20-25% below recent highs and PCL shares are off c15% since late July. We retain our Sell rating on Potlatch (NYSE: PCH) (target unchanged at $30 based on a blend of 10x 2011e EV/EBITDA & our estimate of underlying asset value ($35/sh))."
"Expectations getting more realistic, but no quick fix for US housing - We remain cautious on the near-to-medium term outlook for US housing, the key driver for LPX, PCL and WY’s profitability. But we believe current valuations and expectations (both industry and financial market) have come into better balance with fundamentals."
"Still cautious on housing-exposed companies/favor paper-based packaging -
We see relatively limited downside risk in LPX, PCL and WY at current valuations, barring a material leg down in already-depressed housing activity."
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