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On Tuesday, Benchmark analyst Reuben Garner provided insights into the building products sector, highlighting mixed movements in lumber pricing for the previous trading week which ended on March 21st. The analysis particularly impacts Builders FirstSource (BLDR), a prominent player in the building products industry with $16.4 billion in revenue and a strong financial health score according to InvestingPro. Garner noted modest increases in Western US Dry and SYP (West) prices, while other categories such as SPF Western, SPF Eastern, Green Doug. Fir, and Panels experienced declines.
The report also included Sherwood’s forecasts for the upcoming week, ending March 28, 2025, suggesting an anticipated uptick in prices for SPF Eastern and SYP (West). Conversely, predictions indicated a downward trend for SPF Western, Western US Dry, Green Doug. Fir, and Panels. Want deeper insights? InvestingPro offers exclusive access to 12 additional ProTips and comprehensive analysis for BLDR, helping investors make informed decisions in the volatile building products sector.
Garner’s update reflected a positive shift in lumber futures, with the lead May 2025 contract rising by 1.3% week-over-week, accompanied by a $23 premium. Similarly, the July 2025 contract saw an increase of 1.8% from the previous week, with a $39 premium. These movements in futures contracts were in line with the new lumber futures contract format, which now includes truckload deliveries to Chicago.
For the 2025 models of UFPI, BLDR, BCC, and BXC, Benchmark continues to use an average lumber and panels price assumption of approximately $550. This figure remains below the current cash price and the front-month contract value. The report clarified that today’s estimated $550 price aligns with the approximately $450 price previously used in their models, adjusted to fit the new contract format.
The lumber pricing dynamics and futures movements discussed in Garner’s report provide a snapshot of the current state and expectations within the building products sector, with specific implications for companies like UFPI, BLDR, BCC, and BXC. BLDR currently trades at a P/E ratio of 14.32 and near its 52-week low, having declined over 31% in the past six months. According to InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels. Access the full Pro Research Report, available for BLDR and 1,400+ other US stocks, for comprehensive analysis and actionable insights.
In other recent news, Builders FirstSource has been the focus of several analyst updates following its latest earnings report. Loop Capital Markets adjusted its price target for the company to $190, down from $205, while maintaining a Buy rating. The company reported a year-over-year decline in sales for the fourth quarter of 2024, with single-family sales down by 7% and multi-family sales down by 29%. Despite these declines, Builders FirstSource’s gross margin exceeded expectations. The company’s guidance for 2025 includes an adjusted EBITDA range of $1.9 billion to $2.3 billion, which fell short of consensus estimates.
Stifel also revised its price target for Builders FirstSource to $156 from $175, while keeping a Buy rating. They noted the company’s current valuation and the importance of stabilization in residential construction. Jefferies adjusted its price target to $180 from $200, highlighting the company’s robust fourth-quarter performance and the potential for EBITDA growth in 2025. BMO Capital Markets lowered its price target to $168, citing housing market risks and potential pricing competition. Despite these revisions, analysts generally express confidence in Builders FirstSource’s financial flexibility and management team.
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