Truist Securities upgrades Potlatch stock to Buy on lumber price outlook

Investing.com - Truist Securities upgraded Potlatch (NASDAQ:PCH), a $3.1 billion market cap timber REIT with a notable 4.5% dividend yield, from Hold to Buy on Wednesday, while raising its price target to $52.00 from $44.00. According to InvestingPro data, the company has maintained dividend payments for an impressive 55 consecutive years.

The upgrade reflects Truist’s view that Potlatch is well-positioned to benefit from rising lumber prices given the company’s leverage to lumber strategy. InvestingPro analysis indicates net income is expected to grow this year, with analysts maintaining a bullish consensus on the stock.

Truist expects lumber supply from Canada to tighten as the U.S. implements antidumping duties (AD) and countervailing duties (CVD) totaling 34.45% on most Canadian lumber producers.

The firm also noted the potential for the U.S. to assess Section 232 tariffs on lumber, creating additional pressure on Canadian imports.

Truist suspects these duties and potential tariffs could force some marginal producers to close capacity, putting upward pressure on lumber pricing that would benefit Potlatch.

In other recent news, PotlatchDeltic Corp reported a robust performance for the first quarter of 2025, significantly exceeding earnings expectations. The company posted an earnings per share (EPS) of $0.33, surpassing the forecast of $0.17 by 94%. Revenue also exceeded expectations, reaching $268.3 million against a projected $243.1 million. Despite these strong earnings, Citi analysts adjusted their outlook on PotlatchDeltic, reducing the stock price target to $47 from $49, while maintaining a Buy rating. The analysts highlighted the company’s high-quality portfolio and anticipated a recovery in lumber prices by 2025. PotlatchDeltic is actively expanding its Wood Products segment, with modernization efforts at its Waldo facility and the exploration of natural climate solutions, including solar and lithium projects. Meanwhile, Citi analysts reiterated their Buy rating for Weyerhaeuser (NYSE:WY), maintaining a price target of $31.00, citing optimism about potential changes in Canadian lumber import duties. Both companies are navigating market dynamics with strategic initiatives aimed at capitalizing on future opportunities.

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