Byron Capital’s Goff raises price target on Quebecor

Quebecor CEO Pierre Karl Péladeau. Byron Capital analyst Rob Goff thinks Quebecor is “significantly undervalued” relative to its peers, and in many cases is operationally outperforming them. On Tuesday, Quebecor (TSX:QBR.B) reported its Q3, 2012 results. The company earned $18.6-million, or 30 cents per basic share on revenue of $1.06-billion, which was up 4.4% from the same period last year.

Quebecor CEO Pierre Karl Peladeau said the business environment was tough.

“The corporation continued its growth in the third quarter of 2012 despite a fiercely competitive business environment in most of its lines of business,” he said, adding: “It increased its revenues by 4.4 per cent, its operating income by 10.4 per cent and its adjusted income from continuing operations by 30.2 per cent, confirming the profitability of the major investments made in recent years.”

Byron Capital analyst Rob Goff thinks Quebecor is “significantly undervalued” relative to its peers and, in many cases, is operationally outperforming them. In a research update to clients Wednesday, Goff increased his 2013 EBITDA estimate on Quebecor by $38 million. At a 6x EBITDA multiple, notes the Byron Capital analyst, this equates to a $2.69 valuation impact. As a result, Goff reiterated his STRONG BUY rating and increased his price target by $2.00 to $45.00.

Founded in 1950, Montreal-based Quebecor is a broadcasting and publishing company that operates subsidiaries such as Canada’s largest newspaper publisher Sun Media, cable and wireless provider Vidéotron, and website network Canoe Inc.

Goff says Quebecor continues to impress in its telecom business, where the average revenue per user was up 7.7%. At 25,600, the company added twice as many high-speed internet subscribers as rival BCE, who tacked on just 12,800.

Shares of Quebecor closed Friday up 3.1% to $36.92.

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