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080417 Deutsche Bank Report - New WY CEO

Deutsche Bank - Equity Research


Weyerhaeuser {Ticker: WY, Closing Price: USD 63.06, Target Price: USD 95.00, Recommendation: Buy}.


* Weyerhaeuser announced that Dan Fulton will take over as CEO from Steve Rogel, effective immediately. Rogel will remain on as non- executive Chairman of the Board. The elevation of Fulton is no surprise. He has been the obvious “heir apparent" ever since his election as President last December. However, the fact that he is assuming the CEO title immediately seems sudden. We thought that Rogel would remain CEO until sometime in 2009. We do not know whether there were any health or other pressing personal issues involved.


* Implications for the stock? This obviously creates more uncertainty. Rogel was someone who acknowledged the need for change, although implementation of changes was at a very deliberate pace.  Whether Fulton will push the company in another direction remains unclear. For now, we are making no change to our bullish thesis. The enormous asset value of Weyerhaeuser's forestry assets remains. The currently dismal market conditions in wood products and homebuilding make unlocking that value a challenge, but we think that patient investors will be rewarded.


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