Raymond James analyst Buck Horne upgraded Weyerhaeuser (NYSE: WY) from Outperform to Strong Buy with a price target of $30.00.

The analyst comments: “We are upgrading our rating on Weyerhaeuser to Strong Buy (from Outperform), following what we believe has been a disproportionate overreaction to WY’s June operating update posted to the company’s website on June 25. Since then, WY shares have traded off by ~13%, leaving its valuation very close to ~$2,000/acre on a total EV/timber-only basiswhile ascribing ZERO value to its industry-leading Wood Products or Strategic Land Solutions platforms. Adding in our conservative estimates for total platform value, WY’s current 37% NAV discount is nearly two full standard deviations below its 15-year median. We note, WY shares have already bounced off these valuation levels multiple times this year. But importantly, those earlier bounces didn’t have the benefit of $500+/mbf lumber prices which have continued to steadily rise into July (currently $525/mbf per Random Lengths Composite).

With signs of continued tightening across the Wood Products supply chain, WY’s industry-leading manufacturing platform appears to be solidly back to double-digit gross margins, despite the added fuel costs. Given the importance of timberland as a key “store-of-value” asset class that provides steady inflation protection, cash flow upside, and multitudes of alternative-use optionality - we find the public market pricing of WY’s 10.5 million acres (which includes some of North America’s most irreplaceable forestry assets) too compelling to ignore. Said another way, investors can currently acquire two acres of the industry’s highest quality timber portfolio for the same price as 1 oz. of gold, while getting all of WY’s lumber and HBU land optionality as completely free call options.”

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Shares of Weyerhaeuser closed at $22.50 yesterday.