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On Wednesday, Raymond (NSE:RYMD) James analyst Buck Horne increased the price target for Weyerhaeuser (NYSE:WY) to $35.00, up from the previous $32.00, while maintaining an Outperform rating on the company’s shares. Currently trading at $30.43 with a market capitalization of $22.1 billion, the stock sits within analysts’ target range of $32-$40. The adjustment follows the company’s strong fourth-quarter results from the previous week and a revised outlook for lumber and Oriented Strand Board (OSB) commodity prices.
Horne’s commentary highlighted that despite the indefinite pause on universal Trump Tariffs following policy reversals last Monday, the cost curve for Canadian sawmills is expected to rise sharply. This increase is due to new duties from the 6th US Administrative Review set to become effective in August 2025, potentially doubling current duties to approximately 30% later this year. The analyst anticipates these tariffs will lead to an increase in sawmill closures in Canada, creating a more robust pricing environment for domestic producers such as Weyerhaeuser, which has maintained dividend payments for 54 consecutive years and currently offers a 3.12% dividend yield.
The revised commodity price assumptions by Raymond James, set at $475 per thousand board feet (mbf) for 2025 and $525 per mbf for 2026, remain conservative compared to their Canadian counterparts’ more bullish predictions of over $600 per mbf under certain tariff and capacity scenarios. However, even with these conservative figures, the firm expects Weyerhaeuser to see significant improvements in cash flow and profitability, with potential for further upside if additional tariffs are imposed or if housing demand increases later in the year.
Weyerhaeuser is currently trading at a 20% discount to net asset value (NAV) and 17 times the fiscal year 2026 free cash flow, which is below the 19 times REIT sector average. According to Horne, this presents an attractive entry point for investors, given the favorable risk/reward balance and the potential for upside.
In other recent news, Weyerhaeuser Company has reported its fourth-quarter results for 2024, surpassing both DA Davidson’s and the broader consensus’ projections. The company’s adjusted earnings per share (EPS) came in at $0.11, beating the analyst consensus of $0.05 by $0.06. However, the company’s revenue of $1.71 billion fell slightly short of the projected $1.72 billion. Weyerhaeuser’s Non-Timberland Segment (NCS) EBITDA for 2024 was disclosed at $84 million, positioning the company favorably to surpass its 2025 goal of $100 million.
DA Davidson maintained a positive outlook on Weyerhaeuser, reiterating a Buy rating with a $36.00 price target. The firm noted the return to profitability in Weyerhaeuser’s lumber division and suggested potential for further gains. These recent developments underscore the incremental opportunities anticipated in the upcoming year. The firm’s recommendation for Weyerhaeuser shares remains a Buy, barring significant shifts in lumber and Oriented Strand Board (OSB) pricing.
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