Weyerhaeuser a Buy in otherwise cautious forest products view, Goldman says

Jul. 15, 2021 3:57 PM ETWeyerhaeuser Company (WY), BCC, LPXLPX, WY, CUT, WOOD, BCC, NAILBy: Carl Surran, SA News Editor

Sawmill
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  • The forest products sector is initiated with a cautious outlook at Goldman Sachs, which expects prices will settle down as capacity ramps and input costs decline, along with near-term moderation in consumer demand.
  • As prices retreat further from May-June highs, analyst Susan Maklari sees company revenues and EBITDA margins to follow a similar path and contract heading into 2022, prompting Sell recommendations for Louisiana-Pacific (LPX -2.9%) and Bose Cascade (BCC -4.8%).
  • ETFs: WOOD, CUT, NAIL
  • But Maklari views Weyerhaeuser (WY -0.2%) as relatively more defensive, meriting a Buy rating and its timberlands comprise ~75% of its enterprise value.
  • Additionally, Maklari notes the company's focus on generating value from its assets through their life cycle, with newer revenue streams as well as cost controls and efficiencies.
  • With demand easing and supply expanding in response to earlier record high prices, lumber futures recently have surrendered all of their astronomical 2021 gains.

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