Buckingham: Quad/Graphics Is The 'Clear Best Of Breed' In Commercial Print

Quad/Graphics, Inc. QUAD is a "clear best of breed" in the printing and marketing sector, according to Buckingham Research Group. 

The Analyst

The Buckingham Research Group's James Clement initiated coverage of Quad/Graphics with a Buy rating and $28 price target.

The Thesis

If the printing business is a "rough neighborhood," then Quad/Graphics is the "best house" for investors, Clement said in the initiation note.

The company's core printed product lines are seeing weakness from industry overcapacity, but management is shifting toward marketing services after acquiring Ivie & Associates, a Dallas-based provider of onsite marketing services, the analyst said. 

Quad/Graphics will focus more on advertising and public relations campaigns; advice on media buying; and data analysis on the spending mix between print, TV, radio, physical retail and internet marketing, Clement said. 

The market for these services tops $100 billion per year, and Quad/Graphics' existing positioning in print gives it an "edge" in the space, the analyst saiud. 

Quad/Graphics' stock offers investors a dividend yield close to 6 percent that's is backed by one of the industry's best balance sheets at just 2.1x leverage, Clement said. While other printing companies offer a higher dividend yield, Quad/Graphics' is "very safe," as it is funded with less than one-third of the company's total free cash flow, he said. 

The stock is down 12 percent since the start of 2018, which presents an attractive buying opportunity for investors, the analyst said.

Under a "best case scenario," the stock could gain 100 percent, while the "worst case scenario" is 7 percent to the downside, according to Buckingham. 

Price Action

Quad/Graphics shares were up 4.25 percent at the time of publication Monday.  

Related Links:

Benzinga's Top Upgrades, Downgrades For June 18, 2018

Jim Cramer Advises His Viewers On Consolidated Edison, L Brands And More