Zacks Investment Research downgraded shares of Universal Forest Products Inc. (UFPI) from OUTPERFORM to NEUTRAL on January 02, 2014, with a target price of $55.00.
Universal Forest's focus on expansion through development of industrial business, entry into markets without adding capacities and accretive acquisitions are expected to be a boon. Addition of the SE Panel assets will enable the company to gain easy access into concrete forming and construction industries of the southeastern region of the United States. Also, the policy of rewarding shareholders through dividend payments is an added advantage. The recent 5% hike in the annual dividend rate is worth mentioning in this regard. Also, in the third quarter 2013, the company's earnings more than doubled year over year to $0.71 per share while revenues grew 22%. Going forward, management anticipates improving its top-line growth by adding new customers and products to its portfolio. Anticipating that the company's share price already discounts the impact of the positives discussed above, we have lowered our recommendation on Universal Forest from Outperform to Neutral.
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