On Wednesday, DA Davidson showed confidence in Boise Cascade Company (NYSE:BCC) stock, increasing its price target from $155.00 to $160.00 while maintaining a Buy rating on the stock.
The firm believes that the company, which operates in the building products sector, possesses an attractive value that is not fully recognized in the current market, particularly regarding the stability of Engineered Wood Products (EWP) pricing.
The analyst noted that while Boise Cascade's first-quarter earnings for 2024 are anticipated to be in line with expectations, there are specific factors that could be positively received by the market. These include the potential for heightened share repurchase activity or a more aggressive stance on buybacks, as well as commentary indicating a stabilization of EWP prices.
The revised price target of $160.00 is based on multiples of 7.7 times and 7.1 times the firm's EBITDA forecasts for 2024 and 2025, respectively, and 14 times and 13 times the earnings per share (EPS) estimates for these years. The analyst pointed out that the shares are currently trading at less than 6.5 times EBITDA forecasts and between 11 and 12 times EPS estimates.
The firm also highlighted Boise Cascade's strong balance sheet, which they believe could lead to significant cash returns for shareholders. At the end of 2023, the company had approximately $13 per share in net cash and is projected to generate around $9 per share in free cash flow for 2024. This financial position underscores the potential for the company to deliver value to its investors.
InvestingPro Insights
Boise Cascade Company's (NYSE:BCC) financial health and market performance show a promising picture for investors, as highlighted by recent data from InvestingPro. The company holds a market capitalization of $5.52 billion, which is a testament to its size and stability in the building products sector. Its P/E ratio stands at 11.42, suggesting the stock may be reasonably valued compared to industry peers.
One of the standout InvestingPro Tips includes the fact that Boise Cascade holds more cash than debt on its balance sheet, providing a solid foundation for financial flexibility and potential shareholder returns. Additionally, the company's significant dividend yield of 6.32% is a compelling factor for income-focused investors, especially in light of the impressive 128.84% one-year price total return. It's also worth noting that two analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's profitability.
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