DA Davidson Downgrades Potlatch (PCH) to Neutral; Q3-11 Beat Propelled by Low Land Basis, Hedging Gains
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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 downgraded Potlatch (NASDAQ: PCH) from Buy to Neutral, price target lowered from $38 to $35.
DA analyst says, "Potlatch has managed adroitly through the downturn, selling off non-core lands to support its $2.04 dividend and maintain good liquidity (a $150 million undrawn revolving bank facility), with sufficient cash on hand ($80 million) to fund the dividend for another year. The company maintains that the most likely scenario for the dividend is that it remains static at $2.04 per share, but acknowledged that a housing recovery is not on the horizon and that the company will not sell assets on the cheap (to the detriment of long term shareholder value) to fund the dividend. With estimates coming down and the expectation that PCH will continue to pay out more than it earns, thus eroding book value throughout our forecast horizon, we are cutting our price target and rating."
"We now expect Potlatch to earn $1.27 in 2011, up from our previous estimate of $1.06, thanks to the $0.14 upside surprise in Q3 and a $0.07 adjustment to our Q4-11 estimate, which now stands at earnings of $0.24 per share (up from a previous estimate of $0.17). Estimates for 2012 decline from earnings of $1.33 to earnings of $1.17."
For more ratings news on Potlatch click here and for the rating history of Potlatch click here.
Shares of Potlatch closed at $33.73 yesterday.
DA analyst says, "Potlatch has managed adroitly through the downturn, selling off non-core lands to support its $2.04 dividend and maintain good liquidity (a $150 million undrawn revolving bank facility), with sufficient cash on hand ($80 million) to fund the dividend for another year. The company maintains that the most likely scenario for the dividend is that it remains static at $2.04 per share, but acknowledged that a housing recovery is not on the horizon and that the company will not sell assets on the cheap (to the detriment of long term shareholder value) to fund the dividend. With estimates coming down and the expectation that PCH will continue to pay out more than it earns, thus eroding book value throughout our forecast horizon, we are cutting our price target and rating."
"We now expect Potlatch to earn $1.27 in 2011, up from our previous estimate of $1.06, thanks to the $0.14 upside surprise in Q3 and a $0.07 adjustment to our Q4-11 estimate, which now stands at earnings of $0.24 per share (up from a previous estimate of $0.17). Estimates for 2012 decline from earnings of $1.33 to earnings of $1.17."
For more ratings news on Potlatch click here and for the rating history of Potlatch click here.
Shares of Potlatch closed at $33.73 yesterday.
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