Housing Market Losing Momentum In Many Key Markets, Analyst Gets Cautious On West Fraser Timber

Credit Suisse analyst reiterated an Outperform rating on the shares of West Fraser Timber Co Ltd WFG and lowered the price target from $97 to $92.50.
The target price update, the analyst said, is largely focused on pricing moderation versus past views and rather lackluster housing market activity.
The analyst goes by the U.S. housing market view that mixed March activity with generally healthy traffic, but losing momentum in many key markets.
Buyer traffic was consistent, but momentum is declining in many key new construction markets and choppiness is expected in 2023 as potential buyers digest the more difficult affordability, but also see only limited inventory for sales.
The above views are consistent with the analyst’s concerns over the potential for mixed and sometimes negative data points but with positive potential in a severely cyclical industry.
Forest product stocks, the analyst noted, are notoriously cyclical and often with rather accentuated moves in both directions, with perfect timing being elusive.
The analyst said that rate moves in H2 2023, along with the current housing price compression, bode well for affordability and return to improved prices and solid wood demand.
The analyst believes West Fraser has an enviable position in both lumber and OSB markets; however, pricing and housing dynamics are not currently overly supportive.
Price Action: WFG shares are trading lower by 0.31% at $77.23 on the last check Tuesday.

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