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On Monday, Loop Capital Markets adjusted its price target for Boise Cascade Company (NYSE:BCC) shares, bringing it down to $135 from $140, while reiterating a Buy rating on the stock. Currently trading at $95.66 with a P/E ratio of 9.94, InvestingPro analysis suggests the stock is undervalued relative to its Fair Value. The adjustment comes as the firm recalibrates its expectations in light of a more cautious outlook for residential demand and the pace of recovery in engineered wood products (EWP) pricing.
Boise Cascade has been experiencing the effects of EWP price deflation, attributed to supply and demand imbalances within a weakening residential market. The company maintains strong financial health with an InvestingPro Overall Score of 2.81 (GOOD) and offers a substantial 6.1% dividend yield. Despite these challenges, Loop Capital sees the company’s ongoing investments, such as the modernization of its Oakdale, Louisiana manufacturing facility, as a potential positive influence when the market for single-family housing starts to improve.
The firm highlighted Boise Cascade’s significant exposure to the single-family housing sector, which accounts for approximately 80% of its business. With a strong current ratio of 3.34 and more cash than debt on its balance sheet, the company is well-positioned to weather market fluctuations. The company’s margins in this segment are expected to normalize at levels much higher than those seen before the pandemic, thanks to its strategic focus on increasing the sales concentration of higher-margin product categories.For deeper insights into BCC’s financial health and growth potential, including 12 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
Loop Capital also issued an apology for an internal modeling error related to EWP pricing that affected previous estimates. Consequently, the firm has slightly lowered its volume assumptions and expectations for EWP pricing recovery for the first quarter of 2025 and the full fiscal years of 2025 and 2026. The revised EBITDA forecasts now stand at $98 million (a decrease of $36 million), $553 million (a decrease of $105 million), and $625 million (a decrease of $95 million) for the respective periods.
In other recent news, Boise Cascade Company reported its fourth-quarter 2024 results, meeting market expectations for revenue, EBITDA, and earnings per share (EPS). Despite softer demand due to a decline in housing starts, the company managed to leverage favorable commodity pricing trends. Analysts from Benchmark maintained a Hold rating, citing a challenging macroeconomic environment expected to persist into 2025. BMO Capital Markets reduced its price target for Boise Cascade to $122 but maintained a Market Perform rating, noting the company’s strong management and balance sheet. Truist Securities also adjusted its price target to $134, continuing to recommend a Buy rating despite a slight EPS miss in the fourth quarter. Loop Capital reduced its price target to $140 while maintaining a Buy rating, highlighting strong performance in the building materials distribution segment. DA Davidson lowered its price target to $125, maintaining a Buy rating and expressing optimism for a stronger performance later in the year. These developments reflect the company’s navigation through market challenges and the varying outlooks of analysts regarding its future performance.
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