Weyerhaeuser (WY) reported relatively routine Q3 results and Q4 segment guidance, although its decision to lower 2026 capital expenditures and use part of the proceeds from its divestiture of non-core timberlands for share buybacks is encouraging, RBC Capital Markets said Monday in an emailed note.
While planned capital expenditure for 2026 on Monticello has decreased to $250 million from $300 million, construction has started and the project remains on track for a start-up in mid-2027. Weyerhaeuser said the total project cost is expected to be marginally higher than its $500 million estimate, but the return profile remains very attractive, according to the note.
Indefinite curtailments since the start of September have removed nearly 975 million square feet of capacity from the oriented strand board market, compared with approximately 750 million square feet expected to be added through competitor Huber Engineered Woods' near-term start-up, a positive for its OSB business near-term outlook, the note said.
However, demand remains under pressure in the OSB market, and management indicated additional industry closures could happen if the weak pricing environment persists. Still, another significant competitor mill, with nearly 1 billion square feet of capacity, is also planning to start operations in mid-2027, the brokerage said.
Management is also considering "seven or eight different sites" for data center development, the brokerage added.
Weyerhaeuser had repurchased $30 million shares through the end of Q3, RBC said.
RBC kept an outperform rating on Weyerhaeuser with a price target of $25.
Shares of Weyerhaeuser rose over 4% in Monday trading.
Price: 21.34, Change: +0.99, Percent Change: +4.86
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