Earnings Update: Here's Why Analysts Just Lifted Their UFP Industries, Inc. (NASDAQ:UFPI) Price Target To US$134

It's been a good week for UFP Industries, Inc. (NASDAQ:UFPI) shareholders, because the company has just released its latest second-quarter results, and the shares gained 5.5% to US$132. It was a credible result overall, with revenues of US$1.9b and statutory earnings per share of US$2.05 both in line with analyst estimates, showing that UFP Industries is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for UFP Industries

Following last week's earnings report, UFP Industries' six analysts are forecasting 2024 revenues to be US$6.84b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$7.42, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$6.81b and earnings per share (EPS) of US$7.64 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 10% to US$134, suggesting that these impacts are not expected to weigh on the stock's value in the long term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic UFP Industries analyst has a price target of US$155 per share, while the most pessimistic values it at US$120. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting UFP Industries is an easy business to forecast or the the analysts are all using similar assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.5% by the end of 2024. This indicates a significant reduction from annual growth of 13% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - UFP Industries is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for UFP Industries. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that UFP Industries' revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on UFP Industries. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple UFP Industries analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - UFP Industries has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com