Weyerhaeuser Earnings: Economic Uncertainty Raises Concerns for Near-Term Lumber Demand

No-moat-rated Weyerhaeuser reported first-quarter results in line with our expectations. Net sales fell roughly 2% year over year as all three segments experienced a decline. Higher lumber prices were largely offset by lower OSB prices in the quarter, but this was not a surprise given OSB prices have been retreating for some time. New OSB capacity has come online, which has increased supply in the US and weighed on prices. Lumber and wood product demand held up relatively well in the quarter but uncertainty around tariffs and global trade sets up a challenging remainder of the year. While Weyerhaeuser's direct exposure to new tariffs is somewhat limited, heightened economic uncertainty could weigh on construction spending, which would directly affect lumber and wood product markets. As such, we've decreased our fair value estimates to $32 from $35 due to lower near-term profitability in our forecast.