Temple-Inland Inc. (TIN)

[analogdog]

Ahead of the Bell: Pulp and paper products
Monday June 9, 8:22 am ET
Analysts say recovering wood prices and production cuts will help pulp and paper stocks

NEW YORK (AP) -- Analysts said Monday that cost cuts and higher prices for wood products should lead to better results for companies that make pulp and paper products.

RBC Capital Markets analyst Paul Quinn said Mercer International Inc., Domtar Corp. and AbitibiBowater Inc. will be able to raise prices after reducing production capacity, which helped balance their supply with decreasing demand. He started coverage of Domtar and AbitibiBowater at "Outperform."

AbitibiBowater also will benefit from higher prices for newsprint and groundwood paper, he wrote. He rated Domtar stock at "Sector Perform" because he believes the company will have to cut capacity more to keep supply and demand balanced.

Lehman Brothers analyst Peter Ruschmeier said wood product prices are improving after reaching long-term lows in the first quarter. He said Weyerhaeuser Co., AbitibiBowater and Temple-Inland Inc. could report larger profits as a result.

He said prices for lumber, oriented strandboard and plywood are higher than he expected, although he thinks the prices of lumber and plywood are beginning to ease back from their recent gains.