Market Overview

Inventory Buildups, Subpar Demand To Blame For Rayonier's Downgrade At BMO


Analysts at BMO Capital Markets no longer hold a bullish rating on Rayonier Inc. (NYSE: RYN), a leading timberland real estate investment trust. Mark Wilde downgraded Rayonier's stock from Outperform to Market Perform with an unchanged $31 price target.

Rayonier has been operating over the past 10 years in an environment characterized by subpar demand while at the same time it has been improving its forest productivity, Wilde explained. As such, this has created an inventory buildup which would be hard to work through at a time when southern sawlog prices are 60 percent below (in nominal terms) what they were at in 2005.

In fact, southern sawlog prices have now declined for the past seven quarters which calls into question when or if a recovery in prices will occur. Meanwhile, demand for sawlog is expected to increase moving forward as lumber production continues to pivot towards the south, the analyst added.

On the other hand, there are a few positive aspects of Rayonier's business, including a disciplined management and board team, including two of the "smartest timberland investment managers" Scott Jones and Andy Wiltshire. Yet at the end of the day, a downgrade is justified merely due to an inventory build and skepticism around the timing and extent of a price recovery in southern log.

Related Links:

Benzinga's Top Upgrades, Downgrades For August 14, 2017

Sonny Perdue Wins Cabinet Endorsement From 669 Agricultural Organizations

Latest Ratings for RYN

Dec 2020Raymond JamesDowngradesOutperformMarket Perform
Sep 2020Raymond JamesMaintainsOutperform
Aug 2020CitigroupDowngradesBuyNeutral

View More Analyst Ratings for RYN
View the Latest Analyst Ratings


Related Articles (RYN)

View Comments and Join the Discussion!

Posted-In: agriculture Andy Wiltshire Mark Wilde Sawlog Scott JonesAnalyst Color Downgrades Analyst Ratings

Latest Ratings

TSLAJP MorganMaintains125.0
INTCTruist SecuritiesMaintains64.0
FBTruist SecuritiesMaintains320.0
AAPLCowen & Co.Maintains153.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at