FEDERAL WAY, Wash. (
shares bid several points lower Wednesday following some unfavorable broker action
Analysts from UBS downgraded Weyerhaeuser shares from buy to neutral, citing the firm's valuation as a reason for the action.
real estate investment trust saw its shares tumble 3.3% at midday to trade at $17.26.
Following Weyerhaeuser's better-than-expected quarterly financial results, released in late October, analysts from Barclays Capital reiterated an overweight rating and raised their price target on the stock to $29.
RBC Capital Markets also reiterated an outperform rating, and raised their price target to $23, following the earnings report. Research firm Dahlman Rose initiated coverage of Weyerhaeuser earlier in October with a buy rating and $20 price target.
Weyerhaeuser shares were popular this week after Jim Cramer, in his
"Mad Money" TV show Monday evening, tapped the firm as one of his top momentum stocks -- part of his "momentum" portfolio of five stocks that fit his momentum detection methodology.
"There's a pattern that's been puzzling investors for ages," Cramer told viewers, and that pattern is a stock that runs up ahead of its earnings release only to sell off on what was reported as "better-than-expected" results. Cramer said it's hard to discern genuine earnings beats from a fake ones, but he's come up with a formula.
Cramer said he analyzed all of the stocks in the
this quarter, looking for stocks that both ran up ahead of their quarterly results, and then kept on going higher after the results were posted. Cramer said for this exercise, he looked at stock prices five days prior to earnings, immediately after earnings and then again five days after earnings.
There were 163 companies on the list whose stock ran up at least 2% ahead of the quarter, said Cramer, but only 21 whose post-earnings results were as good or better as in the five days prior to results. The 21 companies were spread out amongst six sectors, from technology and healthcare to minerals and energy.
Since the best predictor of future winners are past winners, Cramer said he's put together a portfolio of five stocks that he feels will repeat this strong pattern of heading higher when they next report their earnings.
Of the three materials stocks that made the cut, Cramer chose Weyerhaeuser, a stock which he owns for his charitable trust,
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Cramer said Weyerhaeuser is a play on a recovery in housing and the fact that the company is converting itself into a REIT.
Rounding out the list was
( GR) and
For the recent quarter,
Weyeraeuser beat top- and bottom-line expectations with net quarterly earnings of $1.12 billion, or $3.50 per share, compared with break-even results in the year-earlier period. Net revenue jumped 17.7% to $1.66 billion.
Excluding one-time items, adjusted earnings were 25 cents per share, better than the 10 cents per share analysts expected. Analysts typically exclude one-time items when forecasting earnings estimates.
Stronger-than-expected results were attributed to increased demand in cellulose, a key material in papers and fibers.
Weyerhaeuser said single-family home sales ticked up sequentially in the third quarter but it expects to book lower profits from its real estate business in the current quarter as
the market for new-homes remains weak .
"The overall housing market remains in an uncertain state," said CEO Dan Fulton. "We continue to defer (timber) harvest due to lower log demand."
Weyerhaeuser considers itself a forest products company and is converting into a
real estate investment trust in an effort to cut its corporate tax liability. It grows and harvests timber on 22 million acres of forests, manufactures forest products, develops real estate and constructs homes.
In October Weyerhaeuser declared a $5.6 billion
special dividend as part of its REIT conversion, 90% of which was stock, more than doubling its share count to 538 million.
-- Written by Miriam Marcus Reimer in New York.
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