Printer Friendly

NEW PACIFIC CREST SECURITIES' REPORT ON LPX

SEATTLE, Jan. 10 /PRNewswire/ -- Pacific Crest Securities today released a new report on Louisiana-Pacific, reiterating their buy recommendation. LPX is a low-cost producer of building products including plywood, oriented strand board and lumber. With the increased demand for building products and a decreasing supply of raw materials in the U.S., Pacific Crest believes LPX is well positioned to benefit from the strong building environment in most parts of the country.

Summary and Recommendation

1. Louisiana-Pacific is a major integrated forest products company ideally positioned to profit from the continuing rebound in new home construction and the shortage of accessible raw materials in North America. We believe Louisiana-Pacific is still in the early stages of an up-cycle and that peak earnings will approach $5.00 per share. 2. Louisiana-Pacific has timberland holdings in excess of 1.5 million acres. Virtually none of this land is exposed to spotted owl environmental problems prevalent in the Pacific Northwest. The company utilizes large volumes of aspen and other low-cost, non-controversial trees. 3. Louisiana-Pacific has an exceptionally strong balance sheet with nearly as much cash on hand as long-term debt. The debt to total capitalization ratio is less than 17 percent compared to a peer group average of nearly 50 percent. 4. We believe Louisiana-Pacific will earn $3.20 per share in 1994 and $3.95 in 1995. Based on these projections and peak earnings in the $5.00 range, we have a 12-month price target of $55 per share. We continue to rate Louisiana-Pacific as a Buy.

Valuation Louisiana-Pacific's earnings growth is dependent on a continuing recovery and expansion of the U.S. economy. We believe interest rates will remain relatively low and housing starts will continue to improve over the next few years. Beyond our estimates of $3.20 and $3.95 for 1994 and 1995 respectively, we are projecting peak earnings of $5.00 per share. Forest products companies have typically traded at 10-12 times peak earnings. In the case of Louisiana-Pacific, with its low debt, strong balance sheet and excellent management, we believe using a multiple of 11 times peak earnings is conservative. Therefore we are comfortable with a target price of $55 per share in the next 12 months.

Rated--Buy.

Pacific Crest Securities is a regional institutional brokerage and investment banker with offices in Portland, Ore., and Seattle. Their full service brokerage has offers clients timely and focused information on Northwest equities. Pacific Crest Securities was chartered in 1973. -0-
 1/10/94 /CONTACT: Larry Katz, forest products analyst of Pacific Crest, 503-248-0721/ (LPX)


CO: Pacific Crest Securities; Louisiana Pacific Corp. ST: Washington, Oregon IN: FIN PAP SU: RTG

JH -- SE002 -- 0411 01/10/94 08:33 EST
COPYRIGHT 1994 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1994 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jan 10, 1994
Words:449
Previous Article:NATIONAL STEEL CORPORATION ANTICIPATES RECORDING ADJUSTMENT OF $120-$135 MILLION
Next Article:KENETECH ANNOUNCES FINANCING FOR TWO WIND ENERGY PROJECTS
Topics:

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters