RBC forecasts further declines in lumber and OSB prices

On Monday, RBC analysts reported a decrease in the prices of lumber and oriented strand board (OSB) over the past week. The Framing Lumber Composite price fell by $4 to $438, while the OSB Composite price dropped by $7 to $282, according to Random Lengths data. These price movements are particularly relevant for building materials companies like AZEK, a significant player with a $7.17 billion market capitalization and strong 37.22% gross margins.

RBC Elements, in collaboration with its in-house data science team, developed a multi-variable time series model to project future price movements. This model estimates that the Framing Lumber Composite will decrease by an additional $1 to $437 in the coming week.

Similarly, the OSB Composite is forecasted to decline by $5 to $277 next week, based on the same predictive model. These projections are part of RBC’s ongoing analysis of the paper, packaging, and forest product sectors.

The recent price changes reflect ongoing market trends within the lumber and OSB segments, as reported by RBC.

In other recent news, Azek Company Inc. reported strong financial results for the second quarter of fiscal year 2025, surpassing earnings expectations. The company’s adjusted earnings per share (EPS) reached $0.45, exceeding the forecast of $0.43, while revenue also beat projections, totaling $452.2 million against an expected $445.72 million. Azek’s residential segment showed significant growth, with net sales rising by 9% to $437 million. Additionally, the company announced a proposed merger with James Hardie (NYSE:JHX), aiming for substantial cost and sales synergies.

DA Davidson analyst Kurt Yinger increased Azek’s stock price target to $51 from $50, maintaining a Neutral rating. This decision followed Azek’s strong financial performance and strategic initiatives, such as new product launches and expanded distribution partnerships. Despite a slight dip in product sell-through earlier in the year, Azek maintained its full-year guidance, expecting continued growth in the residential segment. The company also expanded its recycling capabilities and acquired Northwest Polymers to support its long-term growth strategy.

Azek’s management expressed confidence in sustaining and expanding margins, highlighting the company’s resilience and ability to navigate economic cycles. The company’s outlook for the full year 2025 projects consolidated net sales between $1.52 billion and $1.55 billion, with anticipated growth in adjusted EBITDA. The proposed merger with James Hardie received positive customer feedback, with expectations of unlocking significant synergies and enhancing Azek’s market position.

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