West Fraser Earnings: Lower Lumber Prices Continue to Weigh on Financial Results

No-moat-rated West Fraser reported first-quarter results that were largely in line with our expectations as low lumber prices weighed on results despite relatively stable lumber shipments. Revenue declined 47% year over year as West Fraser's lumber and EWP (engineered wood products) businesses both saw steep declines. Additionally, West Fraser posted an $84 million operating loss, continuing the trend from the fourth quarter even though lumber prices rose slightly sequentially. We've decreased our fair value estimate for New York Stock Exchange and Toronto Stock Exchange-listed shares to $92 from $104, and CAD 125 from CAD 139 per share, respectively, due to our expectation of lower lumber prices through 2023 than we had previously anticipated.