Universal Forest Products stock target cut to $125 by Benchmark

Wednesday, Universal Forest Products (NASDAQ:UFPI) experienced a change in stock valuation as Benchmark analysts adjusted the price target to $125 from the previous $135, while still maintaining a Buy rating on the shares. Currently trading near its 52-week low of $97.59, InvestingPro analysis suggests the stock is undervalued. The revision followed the company’s first-quarter financial performance, which did not meet expectations due to several challenges.

UFP Industries, the company in question, disclosed its first-quarter results earlier this week, revealing that both EBITDA and EPS fell below analyst predictions, despite revenue matching forecasts. Despite these challenges, the company maintains strong financial health with a current ratio of 4.96 and more cash than debt on its balance sheet. The company faced initial volume struggles in January, largely attributed to severe weather conditions and typical seasonal patterns. Although there was a pickup in activity in February, and recovery by the end of the quarter, it was insufficient to offset the impact of manufacturing variances and escalating material costs. For deeper insights into UFPI’s financial health metrics and growth potential, InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis.

The momentum observed towards the end of the quarter has reportedly carried on into April. However, management anticipates that the current business environment will remain unchanged through the end of the year. This outlook has prompted Benchmark analysts to revise their earnings per share estimates for the fiscal years 2025 and 2026. They have decreased their projections by $1.00 and $0.75, resulting in new estimates of $6.00 and $6.75 for each respective year.

The lowered earnings forecasts have directly influenced the decision to reduce the price target for Universal Forest Products stock. The new target represents a $10 decrease, aligning with the adjusted earnings expectations set forth by the analysts. The company’s stock valuation adjustments reflect the recent financial results and the anticipation of ongoing market conditions.

In other recent news, UFP Industries reported its first-quarter earnings for 2025, revealing an earnings per share (EPS) of $1.60, which exceeded analyst expectations of $1.57. However, the company fell short on revenue, reporting $1.6 billion compared to the anticipated $1.61 billion. Despite the earnings beat, UFP Industries faced a 3% decline in total sales and a significant 21% drop in adjusted EBITDA, settling at $142 million. The company’s outlook for 2025 suggests ongoing demand challenges and competitive pricing pressures across its segments. DA Davidson maintained a Neutral rating on Universal Forest Products, with a price target of $117, following the company’s earnings report. The firm noted effective operating expense management and significant share repurchase activities as positive aspects of the company’s performance. Universal Forest Products reported a year-over-year decline in organic volume by 2%, with aggressive market pricing negatively impacting gross margins. UFP Industries continues to focus on strategic expansions and new product launches despite the challenging macroeconomic environment.

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