CIBC Analyst Price TargetDon't forget what you're holding guys, people are freaking out over $1200 lumber which is significantly above analysts estimates of $615/mfbm.
Price Target (Base Case): C$41.00
Our $41/share price target is based on sum-of-the-parts multiples (2022E EV/EBITDA), less the value of Canfor's forecasted net debt position. We apply 4.0x for lumber and 2.75x for pulp & paper. Our implied consolidated valuation multiple (3.8x) is below the company's historical 12-24 month forward EV/EBITDA multiple (8.0x), reflecting abnormally high profitability in our valuation year. Our target equates to 4.4x mid-cycle EBITDA.
Upside Scenario: C$46.00
Our upside scenario is derived using our bull case scenario assumptions for NA lumber (which includes W. SPF at US$615/mfbm and SYP at US$615 in a modestly higher duty environment for 2022E). In this scenario, we see upside 2022E EBITDA of $1,425MM (with $1,212MM in lumber). With lumber prices here well above mid-cycle levels, we utlitize a lumber segment valuation multiple of 3.5x.
Downside Scenario: C$24.00
Our downside scenario is derived using our bear case scenario assumptions for NA lumber (which includes W. SPF at US$450/mfbm and SYP at US$475 in a modestly higher duty environment for 2022E). In this scenario, we see downside 2022E EBITDA of $631MM (with $418MM in lumber). Despite lumber realizations here being near mid-cycle levels, we utilize a lower lumber segment valuation multiple of 3.75x given reduced balance sheet flexibility.