West Fraser Earnings: New Housing Construction Propels OSB Demand, but Lumber Remains Challenged

No-moat-rated West Fraser reported first-quarter results that were largely in line with our expectations. West Fraser continues to navigate a challenging operating environment as tepid lumber demand weighs on results. Net sales in the first quarter were flat year over year as continued strength in oriented strand board, or OSB, offset declines in lumber, pulp, and paper. While we expect West Fraser to face some challenges in the year, we are encouraged by the continued strength in its OSB operations and expect growth in single-family housing starts to drive additional sales in 2024. We've increased our fair value estimate for New York Stock Exchange- and Toronto Stock Exchange-listed shares to $90 from $89 and to CAD 124 from CAD 120 per share, respectively, due to the time value of money.