Weyerhaeuser Earnings: Lumber Pricing Gains Offer Relief, but Some Volume Headwinds Remain

No-moat-rated Weyerhaeuser reported fourth-quarter results that were largely in line with our expectations. Net sales fell roughly 3.5% year over year due to declines in the timberland business. A recovery in oriented strand board, or OSB, pricing and a sequential pickup in lumber volumes buoyed results in the fourth quarter and set up the company well going into the new year. OSB prices were pressured in the third quarter as industry capacity came online, but demand from single-family construction drove price growth. While prices in the wood products segment improved, a stagnant housing market and soft export demand remain a headwind for the firm. As such, we have maintained our $35 fair value estimate.