Monday, July 03, 2006

Calls of Note Part 4

- UBS is lowering their Q2 ests on Louisiana-Pacific (NYSE:LPX) to $0.48, from $0.70. The consensus is $0.55. Firm's 2006/2007 estimates are now $1.80/$0.70 versus previous $2.35/$1.25. There has been some new supply - mainly from the LPX/Canfor JV which started up in 4Q (3% of additional industry capacity). Prices have declined more than expected. The big supply ramp-up started in 4Q06 and is scheduled to go through 2007 and result in close to 20% additional capacity unless there are delays. There will be some plywood closures to offset this but the firm expects a tough market.

LPX had $1.374 billion of cash at the end of 1Q - $12.90/share. The company has 14mm shares left under its repurchase program and last bought stock at $26. Firm would expect the company to buy back stock with a view towards its longer-term value. Maintains Reduce rating.

Notablecalls: While the est cut is a big one I'm not entirely sure the call is actionable. Bears watching.

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