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Seaport: Universal Forest Products Is Well-Positioned — And Has Never Lost Money

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Seaport: Universal Forest Products Is Well-Positioned — And Has Never Lost Money

Michigan-based wood manufacturer and distributor Universal Forest Products, Inc. (NYSE: UFPI) is showing strong macroeconomic indicators, according to Seaport Global. 

The Analyst

Seaport Global analyst Reuben Garner initiated coverage of Universal Forest Products with a Buy rating and $47 price target. 

The Thesis

Seaport's valuation for the lumber company is staked on three themes, Garner said in a Friday note: 

They are:

  • The company appeals to the entire U.S. economy, not just housing, consumer or industrial sectors. This broadness creates opportunities within the whole economy, rather than conventional investor viewpoints. Universal has not lost money since its launch over 60 years ago, Garner said. 
  • Despite volatility in lumber prices in recent years, Garner said he considers the company’s strategy of growing value with higher margins successful. “This should result in a higher multiple over time, yet the multiple is pretty consistent with last cycle when the company's fundamentals were inferior," he said. 
  • The setup for lumber prices now resembles the second half of 2015, a time when Universal's stock rallied by 30 percent in two months. 

The demand for lumber products relies heavily on U.S. economic activity, the analyst said, adding that housing affordability, consumer confidence and demographic patterns will likely drive the company's growth. 

Price Action

Universal Forest Products' stock was up 0.49 percent at $36.58 at the close Friday. 

Related Links:

Lumber Pricing, Deltic Integration Fetch Potlatchdeltic An Analyst Upgrade 

Loop Capital Turns Bullish On Lumber Liquidators After Visit To HQ 

 

 

Latest Ratings for UFPI

DateFirmActionFromTo
Jul 2020BenchmarkMaintainsBuy
Jun 2020BenchmarkMaintainsBuy
May 2020StifelMaintainsBuy

View More Analyst Ratings for UFPI
View the Latest Analyst Ratings

 

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