UPDATE: D.A. Davidson Downgrades Universal Forest Products Following Q2-13 Operating Earnings

In a report published Friday, D.A. Davidson analyst Steven Chercover downgraded Universal Forest Products UFPI from Buy to Neutral, but raised the price target from $44.00 to $46.00.

In the report, D.A. Davidson noted, “Reported Q2-13 operating earnings were $0.79, compared to $0.67 a year prior and $0.26 in the previous quarter. GAAP earnings were also $0.79, compared to $0.88 a year ago. Earnings beat our estimate of $0.72, and we view them favorably given fear that a freefall in lumber prices in the quarter created risk of an inventory write-down. The company weathered a 28% drop in lumber during the quarter, and if you were to adjust lumber, saw a 40bp increase to gross margin year-over-year. Variance to our model primarily came in the form of a $23 million top-line beat - our margin assumptions were well calibrated.”

Universal Forest Products closed on Thursday at $40.13.