Byron’s Goff raises target on Quebecor to $52, reiterates Top Pick rating

Byron Capital analyst Rob Goff says incoming Quebecor boss Robert Depatie has already earned the respect of of investors, debt holders, peers and customers alike.Quebecor (TSX:QBR.B) yesterday reported its Q4 and fiscal 2012 results. For the year, the company earned 167.7-million on revenue of $4.35-billion, which was up 3.5% year-over-year.

CEO Pierre Karl Peladeau says the company’s product offerings are evolving.

“Quebecor’s results for the 2012 financial year reflect the reliability of the investment strategy we have been pursuing in recent years, primarily entailing capital expenditures for mobile telephony, modernizing Videotron’s network and developing attractive new products, including illico TV new generation, which was launched in 2012,” he said. “Despite continuing strong competition in most of its lines of business, the corporation ended 2012 with a revenue increase of 3.5 per cent compared with 2011, and an operating income increase of 4.6 per cent. The telecommunications segment continued to be a powerful driver of growth.”

Byron Capital analyst Rob Goff says Quebecor is significantly undervalued compared to peers such as Rogers, Shaw and BCE. He says the company, in many cases, has operationally outperformed these competitors. Goff says he was surprised to hear that CEO Peladeau will step back from daily operations, but says replacement Robert Depatie has already earned the respect of of investors, debt holders, peers and customers alike. In a research update to clients this morning, Goff reiterated his Strong Buy and Top Pick rating on Quebecor and raised his price target by $2, to $52.

Goff says he believes Quebecor’s strengths in content ownership, distribution channels, network capabilities, and linguistic barriers provide it with a formidable moat against competition. His says this was demonstrated with 35,000 new subscribers in just two weeks to its Illico Club Unlimited video streaming service, which is a French alternative to Netflix.

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.

_____________________