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Investing.com - BofA Securities downgraded Potlatch (NASDAQ:PCH) from Buy to Underperform on Monday, while lowering its price target to $46.00 from $49.00. InvestingPro data shows this follows a trend where 3 analysts have revised their earnings downwards for the upcoming period, though analyst targets still range from $40 to $55.
The downgrade comes despite Potlatch’s year-to-date stock performance outpacing other wood and timber companies, with PCH shares up 3.44% year-to-date while Weyerhaeuser fell 20%, Boise dropped 42%, and Louisiana Pacific declined 27%. The company maintains a notable 4.58% dividend yield, having maintained dividend payments for 55 consecutive years according to InvestingPro data.
BofA cited expectations that lumber and related commodities markets will remain weak during winter months, with the firm not anticipating Federal Reserve rate cuts until June 2026 and identifying risks related to builder buydowns and assumable/portable mortgages.
The bank noted that supply-demand dynamics have been too weak—with 78-80% operating rates and sufficient domestic supply—for duties or tariffs to significantly impact pricing, while valuations based on operating cash flows appear unattractive due to current commodity prices.
BofA also pointed to limited upside for Potlatch’s dividend until cash flows improve, with the next potential catalysts not expected until late first quarter or early second quarter of 2026 when the company’s planned merger with Rayonier is anticipated to close.
In other recent news, PotlatchDeltic Corp reported stronger-than-expected earnings for the third quarter of 2025. The company achieved an earnings per share (EPS) of $0.36, surpassing the forecast of $0.27. Revenue also exceeded expectations, reaching $314.2 million compared to the projected $303.36 million. In another development, RBC Capital downgraded Potlatch from Outperform to Sector Perform. This downgrade followed a reassessment of Potlatch’s position after its merger with Rayonier. RBC Capital expressed concerns that the merger might dilute Potlatch’s beneficial exposure to U.S. lumber production. These recent developments highlight significant changes and expectations for PotlatchDeltic Corp.
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