Goldman Neutral On Paper/Forest Products: Prefers Boise Cascade, Weyerhauser

In a research note released Thursday, Goldman Sachs initiated coverage of U.S. Paper & Forest Products sector with a Neutral coverage view and touted Boise Cascade Co BCC and Weyerhaeuser Co WY as its preferred stocks.

The firm's coverage universe in the sector includes:

  • Weyerhaeuser: Buy; $37 price target suggesting 22 percent upside.
  • Boise Cascade: Buy; $34 price target, suggesting 38 percent upside.
  • International Paper Co IP: Neutral; $49 price target, suggesting 1 percent upside.
  • WestRock Co WRK: Neutral; $53 price target, suggesting 10 percent upside.
  • Packaging Corp Of America PKG: Sell; $77 price target, suggesting 6 percent downside.
  • Domtar Corp (USA) UFS: Neutral; $40 price target, suggesting 9 percent upside.
  • Enviva Partners LP EVA: Neutral; $28 price target, suggesting 6 percent upside.

Subsectors And Prospects

Dividing the sector into seven product-focused subsectors, Goldman said it is Positive on timberlands, where Weyerhaeuser is active; wood products, where Boise Cascade and Weyerhaeuser has presence; and wood pellets, where Enviva is profiled. However, the firm is Negative on pulp, a key area for Domtar and International Paper. It is Neutral to negative on containerboard, where International Paper, Packaging Corp and WestRock are all operational.

Related Link: Strong Housing Starts And Chinese Demand Bode Well For Weyerhaeuser

The Positive view on timberlands is premised on its land value appreciation and on wawlogs potential for a supercycle. Goldman prefers wood products subsector for its lumber & panels' leverage to housing recovery. Wood pellets are deemed positive due to market growth to meet EU renewable energy regulations.

However, Goldman is Negative on pulp due to oversupply concerns. The muted opinion on container board is due to supply-demand, export price spread and pricing expectations. Thus, Goldman noted that the sector is not only a cyclical group but also not a homogeneous group.

If industrial production improves, the firm sees containerboard stocks such as International Paper, Packaging Corp and WestRock benefiting from it. Housing strength, according to the firm, could support Boise Cascade and Weyerhaeuser. That said, the firm now prefers stocks with housing exposure. Goldman also recommended owning Enviva and Domtar if relative value is appealing, as they have secular trends moving in opposite directions.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
Posted In: forest productsGoldman SachsPaper ProductspulpTimberlandswood pelletswood productsAnalyst ColorLong IdeasShort IdeasCommoditiesInitiationMarketsAnalyst RatingsTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.