Citi Waits For The Right Entry Point In Rayonier, A 'Pure Play' Timber REIT

Rayonier Inc. RYN is a timberland REIT with assets in the U.S. and New Zealand. The company recently announced the addition of a Marcato Capital Management executive to its board.

The Analyst

Citigroup analyst Anthony Pettinari initiated coverage of the shares of Rayonier with a Neutral rating and $37 price target.

The Thesis

Rayonier is "the most 'pure play' of the four publicly traded timber REITs," Pettinari said in a Thursday note, with 77 percent of its last 12 months EBITDA drawn from timber segments versus a 54-percent average among the peer group. (See the analyst's track record here.)

Pettinari said he likes Rayonier's "best-in-class" southern timber portfolio and exposure to Asian export markets. The Florida-based trust holds 2.6 million acres of timberland.

Given the recent outperformance of the stock — which is up 19 percent over the past year compared to a 14-percent decline in the REIT Index and a 4-percent gain by Weyerhaeuser Co WY — Citi said it would wait for a more attractive entry point and greater conviction in southern log price improvement.

Among the timber REITs, Citi said it prefers Weyerhaeuser.