DA Davidson Downgrades Universal Forest Products (UFPI) to Underperform; Shares Appear to be Ahead of Fundamentals
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Price: $89.87 -1.53%
Rating Summary:
5 Buy, 4 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
5 Buy, 4 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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DA Davidson downgraded Universal Forest Products (NASDAQ: UFPI) from Neutral to Underperform with a price target of $27.00.
DA analyst said, "We are downgrading UFPI shares as they have climbed nearly 27% since our Q3-11 update on October 14th and now exceed our price target. We believe UFPI has rallied in tandem with many other home builders on improving optimism for the U.S. housing market, which we hope is warranted – we lack the catalyst or conviction to raise estimates or multiples. Indeed, our 2012 estimate of $0.90 (unchanged and at the low end of consensus) constitutes better than a double from our 2011 estimate of $0.40."
"We want to stress that UFPI is a solid company, well managed, debt free (or close to it), and consistently profitable throughout the downturn. However, the shares are now trading at 9.3x forward EBITDA (compared to a 7.5x 10-year average) and 35x forward earnings (compared to 30x over the last 10 years and 14x during the housing boom). Bottom line, we think UFPI shares are a bit ahead of themselves and the risk reward is now to the downside. We would crystalize short term gains and revisit the stock at lower levels."
For an analyst ratings summary and ratings history on Universal Forest Products click here. For more ratings news on Universal Forest Products click here.
Shares of Universal Forest Products closed at $31.70 yesterday.
DA analyst said, "We are downgrading UFPI shares as they have climbed nearly 27% since our Q3-11 update on October 14th and now exceed our price target. We believe UFPI has rallied in tandem with many other home builders on improving optimism for the U.S. housing market, which we hope is warranted – we lack the catalyst or conviction to raise estimates or multiples. Indeed, our 2012 estimate of $0.90 (unchanged and at the low end of consensus) constitutes better than a double from our 2011 estimate of $0.40."
"We want to stress that UFPI is a solid company, well managed, debt free (or close to it), and consistently profitable throughout the downturn. However, the shares are now trading at 9.3x forward EBITDA (compared to a 7.5x 10-year average) and 35x forward earnings (compared to 30x over the last 10 years and 14x during the housing boom). Bottom line, we think UFPI shares are a bit ahead of themselves and the risk reward is now to the downside. We would crystalize short term gains and revisit the stock at lower levels."
For an analyst ratings summary and ratings history on Universal Forest Products click here. For more ratings news on Universal Forest Products click here.
Shares of Universal Forest Products closed at $31.70 yesterday.
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