Zacks Investment Research downgraded shares of Universal Forest Products Inc. (UFPI) from NEUTRAL to UNDERPERFORM on November 01, 2012, with a target price of $35.00.
Universal Forest's third quarter 2012 results were weak as earnings per share at $0.28 fell short both of the year-ago earnings of $0.29 and the Zacks Consensus Estimate of $0.38. Canadian anti-dumping duty resulting in a $2.0 million pre-tax contingency loss impacted results immensely. Considering the top line, double digit growth was witnessed in four out of five end markets, being offset by higher lumber prices in the quarter to a large extent. These were the prime contributors to our recommendation downgrade from Neutral to Underperform. Moreover, slowly reviving global economy along with significant volatility in the cost of commodity lumber products from primary producers are the prime causes of concern for Universal Forest. Further, Universal's precarious dependence on general market conditions heightens top-line risks in the event of any adverse condition.
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