RR Donnelley’s quarterly report exceeded expectations

Analyst: Little growth expected in 2014

RR Donnelley’s Jefferson City plant closure announcement comes just three days after the company released a quarterly financial report that beat Wall Street expectations.

On Wednesday, however, a financial analyst downgraded the public company (Ticker: RRD) from a “buy” to a “hold” rating, saying he didn’t see much potential for short-term growth. Benzinga, a company that tracks Wall Street firms, reported that Benchmark Company analyst Edward J. Atorino downgraded the company, but raised the target price from $15 to $20.

Benzinga quoted Benchmark’s report as saying shares of Donnelley have risen 30 percent in the past month, including a 15 percent jump since announcing a better-than-expected quarterly report on Monday.

“We maintain a positive long-term view of the Company but feel the stock is fairly valued, with limited near-term upside, as we expect little to no growth through 2014,” the report said.

The company reported $2.6 billion in net sales during the second quarter. That’s an increase of $43 million, or 1.7 percent, from the same period in 2012.

“We are pleased with our results, as the revenue trend continued to improve during the second quarter,” Thomas J. Quinlan III, company president and CEO, said in the report. “The year-over-year change in organic revenue is the best we’ve experience in the last seven quarters, and represents a 40-basis-point improvement from the first-quarter change.”

A Motley Fool article late last year said the company gives large dividends to investors, but has suffered from a huge debt load and weak earnings. “Traditionally, print has been on the decline for a long time, forcing the company to seek out new avenues for profits,” the article said. “Despite moves into digital offerings ... positive results haven’t yet materialized on Donnelley’s bottom line.”

Donnelley’s stock closed at $18.85 on Thursday, down 14 cents (.74 percent).

Accompanying article:

Community, employees react to RR Donnelley's decision to close plant

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