CL King & Associates announced on Barrons that they rasing their rating on RR Donnelley from Neutral to Strong Buy with a $50 price target (subscription required):
The common shares are down almost 25% from their high and are selling at 6.5 times 2007's earnings before interest, taxes, depreciation and amortization of $1,755 million. The stock rarely drops below this level and usually trades as high as 8.5 times Ebitda, a level that yields a potential upside to $60 or nearly 75% on 2008 Ebitda of $1,862 million. In 2008, investors can look forward to a 10-15 cent boost from recent acquisitions; a boost from the Olympics and elections; and an overall 10%-plus earnings gain, which is likely to be one of the few times Donnelley's profits surpass the overall gain in corporate profits. On the downside, RR Donnelley is not as defensive as some stocks, but it is more defensive than most and yields 3.0%.