Quad/Graphics (QUAD) PT Raised to $13 at Benchmark

Benchmark analyst Mark Zgutowicz raised the price target on Quad/Graphics (NYSE: QUAD) to $13.00 (from $10.00) while maintaining a Buy rating.

The analyst commented, "We reiterate our Buy rating and raise our PT to $13 from $10, reflecting a 5.16x exit-GAAP EBITDA ('30E) multiple (in line with current levels) and 6.72% WACC. Net sales of $578mm (+1% y/y) topped consensus by +6%, with nearly all the upside from paper including ink/fuel surcharges passed through at low incremental margin. With that said, stripping out surcharges and paper, underlying targeted print growth was healthier than we would have expected: direct mail and in-store both grew organically at a MSD+ clip, while packaging was roughly flat in the quarter though up y/y on a YTD basis. Management confirmed the petrochemical and diesel-linked surcharges weren't in the original budget and are largely flowing through revenue, not EBITDA. That mix shift is why adjusted EBITDA margin compressed -30bps y/y (7.3% vs. 7.6%) despite the top-line beat. We still expect full-year EBITDA to land near the $195M midpoint even if revenue comes in better than the -3% decline midpoint currently guided and we now model."

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