Trump announces trade deal with EU following months of negotiations
Wednesday, March 19, 2025, DA Davidson released an update on building material stocks, highlighting a surprisingly robust February for new residential construction starts. Despite the strong data, DA Davidson analysts, including Kurt Yinger, have advised caution, suggesting the current rate of 1.1 million single-family starts may not be sustainable in the near term (NT). According to InvestingPro data, this market uncertainty has created opportunities in the sector, with several companies showing strong fundamentals despite volatile stock movements.
The firm’s analysis pointed out a discrepancy between the recent construction data and the insights gathered from building product suppliers and builder confidence levels. Analysts at DA Davidson believe that while the data for February was unexpectedly strong, it may not accurately represent the future trajectory of housing starts.
In the context of the current market, DA Davidson has identified several companies as top picks within the building materials sector. These include Timber REITs, specifically PotlatchDeltic Corporation (NASDAQ:PCH) and Weyerhaeuser Company (NYSE:WY), as well as insulation installers like TopBuild Corp. (NYSE:BLD) and Installed Building Products, Inc. (NYSE:IBP). Additionally, Louisiana-Pacific Corporation (NYSE:LPX) was mentioned favorably.
The analysts expressed optimism that market expectations and valuations are beginning to account for potential downside risks, aligning more closely with a flat outlook for housing starts by the year 2025. This adjustment in market sentiment could potentially benefit the highlighted companies, particularly if they are well-positioned to weather a downturn in new construction.
DA Davidson’s commentary on the building materials sector provides investors with a nuanced perspective on the recent construction data and its potential implications for the market. With a focus on companies that could stand resilient amidst market fluctuations, the firm’s insights offer a targeted view on where investors might find opportunities in the face of uncertain housing start trends.
In other recent news, Louisiana-Pacific Corporation reported robust fourth-quarter earnings for 2024, surpassing analyst expectations with an earnings per share (EPS) of $1.03, compared to the forecasted $0.73. The company’s revenue for the fourth quarter reached $681 million, contributing to a full-year sales increase of 14% to $2.9 billion. Despite these positive results, investor concerns emerged, leading to a decline in the company’s stock price. RBC Capital Markets maintained an Outperform rating on Louisiana-Pacific, keeping the price target at $125, while Truist Securities adjusted its price target to $126 from $135, citing solid siding demand and growth investments.
Louisiana-Pacific’s Siding segment demonstrated strong performance, with a 3% year-over-year increase in volumes during the fourth quarter, even as single-family housing starts declined by 5%. The company provided guidance for 2025, projecting Siding revenue growth between 7-9%, with expectations of reaching $1.65 to $1.70 billion. The full-year Siding EBITDA is expected to be between $415 million and $425 million, reflecting ongoing investments in growth and market share expansion. Additionally, LP Building Solutions announced the appointment of Kelly Barrett to its Board of Directors, aiming to enhance its leadership team with her extensive background in finance and corporate governance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.