Market Overview

Lumber Pricing, Deltic Integration Fetch Potlatchdeltic An Analyst Upgrade


Potlatchdeltic Corp (NASDAQ: PCH)'s 5 percent drop since its May 3 earnings report along with a few positive fundamentals made DA Davidson shed its bearish stance, although the firm stayed on the sidelines.

The Analyst

Analyst Steven Chercover upgraded Potlatchdeltic from Underperform to Neutral and upped his price target from $50 to $52.

The Thesis

All important metrics were ahead of expectations, Chercover said in a note reviewing the Q1 results. Even after the $8.8 million of adjusted EBITDA contribution from Deltic, which had 39 days of contribution, was excluded, that number still beat DA Davidson's estimates by 26 percent, the analyst said.

The analyst also noted the company raised its full-year 2018 adjusted EBITDA guidance, citing the run-up in lumber prices.

Commenting on the Deltic integration, the analyst said Potlatchdeltic reported merger synergies of $30 million for Q1, with $7 million-$8 million additional synergy opportunity currently identified from some Deltic initiatives.

"As we move into seasonally better demand period, it gets tougher to see what drives meaningful downside in Lumber," DA Davidson said. Its concerns that lumber prices will move meaningfully lower has subsided.

Consequently, the firm said its belief that shares face "outsized downside risk" has also waned.

Price Action

Potlatchdeltic shares have shed about 1.54 percent in the year-to-date period. At time of writing, the stock was up 1.6 percent on the day to $49.55.

Related Link:

All About The Paper: Packaging And Paper Stocks Get An Upgrade

Latest Ratings for PCH

Jul 2019DowngradesOutperformSector Perform
Apr 2019UpgradesNeutralBuy
Apr 2019Initiates Coverage OnBuy

View More Analyst Ratings for PCH
View the Latest Analyst Ratings

Posted-In: DA Davidson Steven ChercoverAnalyst Color Upgrades Price Target Analyst Ratings


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