Monday, Credit Suisse upgraded Weyerhaeuser Co. (WY) shares to Neutral from Underperform and increased its price target to $42 from $40. The brokerage narrowed its 2010 loss per share estimate to $0.40 from $0.50, while increasing its 2011 EPS estimate by $0.30 to $1.70.
Analyst Dillon increased estimates after reviewing Weyerhaeuser's fourth quarter 2009 results. The analyst's higher EPS estimates reflect his view that the company's wood products operations would perform better than he has expected earlier. Previously, the analyst expected this segment to lose $140 million in 2010 and now sees only a $115 million loss. In addition, the analyst expects the Cellulose Fibers (specialty pulp) segment to perform better than previously believed.
Based on higher EPS estimates, including a 10-cent increase to $4.55 at the next peak, expected about 2013, the analyst increased price target on shares of Weyerhaeuser to $42 from his prior estimate of $40. Even though the analyst's peak EPS is stated on a C-Corp ongoing basis, he is valuing WY as if it is a REIT starting 2010. Based on the stock's recent weakness, and higher target, the analyst upgraded rating to Neutral.
Currently, WY is up $0.13 or 0.33% and trading at $39.58.
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