D.A. Davidson Upgrades Universal Forest Products, Increases 2Q Estimates

Analyst Steven Chercover at D.A. Davidson & Co. on Thursday, April 17, 2014, upgraded the rating on

from Neutral to Buy. Shares of the company are down $2.64 or 4.87 percent to $51.56 per share, the decrease in the share price Thursday is primarily due to estimates not being up to par. UFPI reported first quarter 2014 operating earnings of 0.36, which compares to 0.26 in the prior year. The firm said that the first quarter was not a disastrous quarter even though weather was severe. The firm is decreasing its 2014 full-year estimates from 3.20 to 3.17, which has incorporated the earnings miss in the first quarter, but also included higher expectations in the second quarter of 2014. Additionally, the firm is increasing its second quarter estimates to 1.24 up from the original 1.12. The firm also expects that most of the lost demand will be captured in the second quarter and third quarter of 2014. The firm's 2015 estimate falls a penny short due to more conservative revenue assumptions and risks from bad weather and volatile lumber prices. The firm has upgraded UFPI, “Shares of UFPI are down 10% on the day, and while they missed modestly, the reaction is overdone in our view. With 30% upside to our $65 target (unchanged) we are upgrading the shares to BUY from Neutral. UFPI is known as a quality operator, and is set up to perform well in the remainder of 2014. New product initiatives and bolt-on deals should drive substantial growth.” Please note that shares of UFPI were down 10 percent at one point. D.A. Davidson & Co. has cited the following reasons as potential risks: