|
|
|
|
May 7, 2009 Dear Friend, Attached are research reports on Overweight rated Allegheny Technologies and IP and Underweight rated Weyerhaeuser and Louisiana-Pacific. Our respective price targets are $50, $19, $21 and zero. We carefully reviewed the outlook for Allegheny Technologies, rated Overweight, where we cut our price target to $50 (This means the 24,300 shares that my son and I own cannot be sold as we too hold out for more). We estimated a $4.00 per share trend rate of earnings in 2012-15, and a rebound to $2.77 per share next year with lower pension expense as the stock market has rebounded some and higher titanium and stainless volumes estimated. We raised our price target on Overweight rated IP to $19 from $13, using the same 8% discount rate, owing to lower costs, higher earnings and 2009 fuel credits. We view IP as the "ArcelorMittal" consoidator of the next cycle as its historic consolidation of Weyerhaeuser's containerboard unit and Smurfit-Stone's likely shutdowns in bankruptcy improve that basic industry. We cut earnings estimates and our price target on Underweight rated Weyerhaeuser to $21 from $23 (note $36 share price), and were disappointed that its stabler timberlands log sales and cellulose fiber (such as diaper pulp) profits fell very sharply. We expected wood manufacturing and home building to bleed, and they did. We cut earnings estimates on Underweight rated Louisiana-Pacific owing to lower volumes. We are planning a two-day metals conference next November 18-19, 2009 in New York, and please save the dates. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
|
