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On Thursday, RBC Capital Markets affirmed their Outperform rating for Louisiana-Pacific Corp (NYSE:LPX), maintaining the stock’s $125.00 price target. The decision comes after Louisiana-Pacific’s shares experienced a sharp decline of 10.1% compared to the S&P 500’s slight increase of 0.2%. The dip in share price was attributed to the company’s forward-looking guidance on its Siding business, which suggested there would be no year-over-year margin expansion by FY25. However, the company’s robust financials, including a healthy current ratio of 2.86 and moderate debt levels, suggest strong operational stability. For deeper insights into LPX’s financial health and growth potential, InvestingPro offers comprehensive analysis with 12+ additional exclusive tips.
Matthew McKellar of RBC Capital notes that the market’s response to Louisiana-Pacific’s guidance might be overlooking the company’s cautious stance and its strategy to reinvest for future growth. Despite the immediate market reaction, RBC Capital maintains a positive outlook on the company’s momentum within the Siding segment.
Louisiana-Pacific is recognized for its ongoing transformation, which RBC Capital continues to find compelling. The Outperform rating is supported by the firm’s confidence in the company’s long-term strategy and its ability to maintain attractive momentum.
The $125 price target set by RBC Capital is derived from a blended approximate 11x EV/EBITDA multiple, close to the company’s current EV/EBITDA of 10.82x. This valuation is based on two components: 85% of the target is predicated on RBC Capital’s Trend EBITDA estimate of $825 million, and the remaining 15% is based on a 2025 EBITDA projection of $713 million. McKellar’s commentary suggests that RBC Capital believes in the strength of Louisiana-Pacific’s market position and its potential for continued success, supported by management’s aggressive share buyback program and seven consecutive years of dividend increases.
In other recent news, Louisiana-Pacific Corporation reported notable financial results for the fourth quarter of 2024, with earnings per share (EPS) of $1.03, significantly surpassing analyst estimates of $0.73. The company’s revenue for the quarter was $681 million, contributing to a full-year revenue of $2.9 billion, marking a 14% increase from the previous year. The Siding segment achieved record performance, with net sales and EBITDA setting new highs, despite a 5% decline in single-family housing starts. Truist Securities adjusted its price target for Louisiana-Pacific from $135 to $126, maintaining a Buy rating, citing solid siding demand and ongoing investments in growth. The company has provided guidance for the first quarter of 2025, expecting Siding EBITDA to be between $95 million and $105 million, with sales forecasts ranging from $390 million to $400 million. For the full year, Siding EBITDA is projected to be between $415 million and $425 million, reflecting anticipated growth of 7-9% year-over-year. Louisiana-Pacific is also planning significant capital investments in 2025, estimated at approximately $200 million, focusing on capacity expansion and product innovation. These developments underscore the company’s strategic focus on growth and operational efficiency in the coming years.
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