Market Overview

Commercial Printer LSC Communications Downgraded By JPMorgan On Fundamental Concerns

Commercial Printer LSC Communications Downgraded By JPMorgan On Fundamental Concerns

Shares of commercial printing company LSC Communications Inc (NYSE: LKSD) have rallied 35 percent over the past two months — fueled in part by an upward revision to revenue guidance — prompting JPMorgan to press the sell button. 

The Analyst

Analyst Alexia Quadrani downgraded shares of LSC Communications from Neutral to Underweight but maintained a $14 price target, suggesting 14-percent downside. 

The Thesis

Despite LSC Communication's track record of making small-to-midsized acquisitions, increasing its printing capabilities and breadth of product offering, the M&A activity may not realize the expected cost synergies, Quadrani said in a Friday note. (See the analyst's track record here.) 

This gap between expectations and reality means potential downside risk for LSC Communications estimates, Quadrani said. 

Fundamentally, the company is likely to be pressured by ongoing print declines, margin compression resulting from volume and pricing pressures and the ongoing shift from traditional office product retailers to online networks, the analyst said. 

JPMorgan sees risk to the company's ability to finance its dividend due to the uncertainty surrounding the "longer-term" health of the core business.

The recent spike in shares is unsustainable, Quadrani said. 

"Overall, we believe risk is skewed to the downside and look for better longer-term fundamental trends in the core business before becoming more positive on the stock." 

The Price Action

LSC Communications shares were plunging 12 percent to $14.28 at the time of publication Friday morning. 

Related Links:

HP's Q2 Print, 3-D Printing Business Trigger Maxim Upgrade

3D Printing ETF Can Print A Rebound

Latest Ratings for LKSD

Jul 2019Buckingham ResearchMaintainsBuy
Jul 2019Wells FargoDowngradesMarket PerformUnderperform
Nov 2018CitigroupMaintainsNeutralNeutral

View More Analyst Ratings for LKSD
View the Latest Analyst Ratings


Related Articles (LKSD)

View Comments and Join the Discussion!

Posted-In: Alexia Quadrani J.P. MorganAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

YEXTDA DavidsonMaintains20.5
BYDB of A SecuritiesMaintains47.0
SAICMorgan StanleyMaintains98.0
PVHMorgan StanleyMaintains104.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at