S&P 500 may face selling pressure as systematic funds reach full exposure
On Friday, Citi analysts reiterated their Buy rating for Weyerhaeuser stock (NYSE: NYSE:WY), maintaining a price target of $31.00. The analysts expressed optimism regarding upcoming changes in import duties on Canadian lumber, anticipated by August. For PotlatchDeltic (NASDAQ:PCH), analysts maintain a strong Buy consensus with price targets ranging from $42 to $55, according to InvestingPro data.
Weyerhaeuser and PotlatchDeltic Corporation had outperformed in the first quarter in anticipation of tariffs on Canadian lumber, which were not implemented on Liberation Day. Since April, both stocks have underperformed as lumber prices decreased by $52 to $438 per thousand board feet. PotlatchDeltic, currently valued at $3.06 billion, offers a notable 4.67% dividend yield and has maintained dividend payments for 55 consecutive years, as highlighted in InvestingPro’s analysis.
Meetings at the National Association of Real Estate Investment Trusts (Nareit) indicated stable demand and low inventory levels, suggesting a favorable outlook for lumber ahead of the expected increase in import duties from 14.5% to 34.5%. A 20% duty increase could lead to a $90 per thousand board feet rise in lumber prices, assuming current levels.
Canadian producers might absorb some of the increased costs, as British Columbia production cash costs are around $450 per thousand board feet. Additionally, Section 232 investigations could potentially add another tariff of 10% to 25%, according to the analysts.
In other recent news, PotlatchDeltic Corp reported a strong first quarter in 2025, significantly surpassing earnings expectations. The company posted an earnings per share (EPS) of $0.33, nearly doubling the forecasted $0.17, while revenue reached $268.3 million, exceeding the anticipated $243.1 million. PotlatchDeltic’s total adjusted EBITDA increased to $63 million, a notable rise from the previous quarter’s $53 million. The Timberlands and Wood Products segments showed significant growth, contributing to the company’s overall success. Additionally, the Waldo, Arkansas sawmill achieved operational milestones, reducing processing costs by 30%.
In other developments, Citi analysts recently adjusted their outlook on Potlatch stock, lowering the price target to $47 from $49 but maintaining a Buy rating. The adjustment reflects the company’s trading position and future potential in the timber and wood products sector. Potlatch is actively enhancing its portfolio through high-quality acquisitions in Southern Timberlands and selling lower-quality land. The company is also expanding its Wood Products segment with the modernization of the Waldo facility. PotlatchDeltic is set to generate its first U.S. carbon credits this year and has a strong pipeline of solar lease agreements, part of its broader effort to capitalize on renewable energy opportunities.
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