DA Davidson maintains Potlatch stock Buy rating, $53 target

Published 28/01/2025, 16:20
DA Davidson maintains Potlatch stock Buy rating, $53 target

Potlatch’s earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to remain steady at $147.1 million, hinting at the possibility of near-term (NT) estimates experiencing a slight increase. This stability is seen as a precursor to a more optimistic 2025 for the lumber market, which has faced more than two years of subdued profitability.The analyst expressed continued confidence in the lumber market’s prospects for the upcoming year, maintaining a bullish stance. This optimism is rooted in the anticipated industry recovery after a period of low earnings. For deeper insights into Potlatch’s financial health and valuation metrics, investors can access comprehensive analysis through InvestingPro, which offers additional ProTips and detailed financial metrics.DA Davidson’s assessment of Potlatch’s stock remains under review, pending further insights from the company’s conference call scheduled for the following day. The current Buy rating reflects the firm’s positive outlook on the stock’s potential performance, though InvestingPro’s Fair Value analysis suggests the stock may be currently overvalued.

The company’s recent financial results have been bolstered by the positive developments associated with the Waldo sawmill project, which is contributing to cost reductions. Yinger noted that the fourth-quarter outcomes were moderately better than his projections, indicating a positive trend for Potlatch’s operational efficiency. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 1.49, though it faces challenges with relatively weak gross profit margins of 11%.

Potlatch’s earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to remain steady, hinting at the possibility of near-term (NT) estimates experiencing a slight increase. This stability is seen as a precursor to a more optimistic 2025 for the lumber market, which has faced more than two years of subdued profitability.

The analyst expressed continued confidence in the lumber market’s prospects for the upcoming year, maintaining a bullish stance. This optimism is rooted in the anticipated industry recovery after a period of low earnings.

DA Davidson’s assessment of Potlatch’s stock remains under review, pending further insights from the company’s conference call scheduled for the following day. The current Buy rating reflects the firm’s positive outlook on the stock’s potential performance.

In other recent news, PotlatchDeltic (NASDAQ:PCH) Corporation has been the focus of several analyst upgrades. Raymond (NSE:RYMD) James upgraded the company’s stock to Outperform, following positive fourth-quarter results and a recent model update. Similarly, BMO Capital Markets upgraded Potlatch’s stock to Outperform, citing potential benefits from upcoming changes in export duties on lumber from Canada. Seaport Global Securities maintained a Buy rating on Potlatch, highlighting the company’s attractive valuation and potential for growth, particularly with benefits from the recently completed Waldo project.

These recent developments come in the wake of PotlatchDeltic’s mixed Q3 earnings report, where adjusted EBITDA fell to $46 million, largely due to a significant land sale. Despite challenges in the Wood Products segment, the Timberlands division maintained steady performance. The company also revealed plans for expansion into natural climate solutions, including solar development and lithium opportunities, and returned $27 million to shareholders through share repurchases.

These analyst upgrades and company plans indicate a positive financial outlook for PotlatchDeltic, with an emphasis on the potential rise in lumber prices and the strategic advantages of the company’s unique pricing arrangement.

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