Stock Analysis

News Flash: Analysts Just Made A Sizeable Upgrade To Their West Fraser Timber Co. Ltd. (TSE:WFT) Forecasts

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TSX:WFG
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Shareholders in West Fraser Timber Co. Ltd. (TSE:WFT) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that West Fraser Timber will make substantially more sales than they'd previously expected.

Following the upgrade, the current consensus from West Fraser Timber's four analysts is for revenues of CA$6.7b in 2021 which - if met - would reflect a substantial 26% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$6.0b in 2021. It looks like there's been a clear increase in optimism around West Fraser Timber, given the substantial gain in revenue forecasts.

Check out our latest analysis for West Fraser Timber

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TSX:WFT Earnings and Revenue Growth January 14th 2021

There was no particular change to the consensus price target of CA$90.26, with West Fraser Timber's latest outlook seemingly not enough to result in a change of valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values West Fraser Timber at CA$115 per share, while the most bearish prices it at CA$56.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the West Fraser Timber's past performance and to peers in the same industry. The analysts are definitely expecting West Fraser Timber's growth to accelerate, with the forecast 26% growth ranking favourably alongside historical growth of 5.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect West Fraser Timber to grow faster than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for West Fraser Timber next year. The analysts also expect revenues to grow faster than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at West Fraser Timber.

Better yet, our automated discounted cash flow calculation (DCF) suggests West Fraser Timber could be moderately undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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