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To: Johnny Canuck who wrote (36377)	3/7/2002 10:33:23 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69878

MCL (Moore): Old friend, time to bail??? ******************* Moore too hot for our analysts U.S. applauds cost cuts Sean Silcoff Financial Post Stan Honda, National Post Moore Corp. used to be the laughingstock of the Toronto Stock Exchange until chief executive Robert Burton took over in 2000 and transformed it into a respectable company. For most of the 1990s, forms and labels printer Moore Corporation Ltd. couldn't get any respect. Then in late 2000 a new investment group bought into the company and installed printing veteran Bob Burton as chief executive. He immediately began cutting costs, slashing jobs and divesting the company of all but its core printing operations. The result: Shareholders in the U.S. climbed aboard. And analysts in Canada bailed. The stock (MCL/TSE) has had a tremendous run in the past 14 months, rising from a low of $4 in December, 2000, to more than $17. The company also has new owners: when Mr. Burton took over, about 90% of the stock was in Canadian hands. It is now about three-quarters U.S.-owned. As Canadians have sold out, the analysts have followed. The first was Nick Morton of RBC Dominion Securities, who dropped coverage in 2001 because "I changed my universe of stocks," he says. Then, in a much discussed research note, Steve Laciak, a National Bank Financial analyst, wrote on Jan. 16 it was "time to bid adieu" to Moore after maintaining a "sell" recommendation during the stock's meteoric price rise. "We still see principally a company trapped in a moribund industry, so our relative and absolute valuations only generate a US$4 per share value," he wrote on a day the interlisted stock (MCL/NYSE) closed at US$10.20 on the New York Stock Exchange. He was followed by BMO Nesbitt Burns' Claude Proulx, who had rated Moore "underperform." But as the Canadians left the building, they crossed paths with a group of enthusiastic U.S. analysts. Two days before Mr. Laciak dropped Moore, Morgan Stanley initiated coverage with an "outperform" rating and a one-year target of US$16. Analyst Douglas Arthur ranked Moore as the top pick among the 22 stocks he covers. "We regard the Burton team as an unusually gifted turnaround management group with a proven record -- a good thing, given that Moore was a total mess when Burton arrived," wrote Mr. Arthur. Moore is trading at about 21 times estimated earnings for this year of US45¢ per share, compared with an average of just 18.3 times at printing giants Quebecor World and R. R. Donnelly. But analyst Charles Strauzer of CJS Securities in White Plains, N.Y. -- who initiated coverage in November with a "strong buy" recommendation -- says printers should be valued based on a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization) because they operate a "heavy iron business" and accrue higher equipment and depreciation costs. His 12-month price target of US$14 to US$15 is based on a multiple of seven times Moore's estimated EBITDA for 2003. While Mr. Laciak said in his note he valued companies "80% for what they are and only 20% for what they hope to become," Mr. Strauzer disagrees, saying it's unfair to assess a company in the early stages of a turnaround. Of course, Canadians have heard that before, as Moore stumbled during two failed turnaround attempts in the 1990s. This time, however, the company is being led by Mr. Burton, who turned around printer World Color Press and consistently made or beat earnings estimates during his 20-year printing career. "When I joined Moore, I said this stock has legs," Mr. Burton says. "I felt this was a US$20 stock from the day I got here." He dismisses those who've dropped coverage, saying "our track record is one straight line going up." MOORE CORP.: CEO: Robert Burton Ticker: MCL Listed: Toronto Stock Exchange Head office: One First Canadian Place, P.O. Box 78 Toronto, Ont. M5X 1G5 Telephone: (416) 364-2600 www.moore.com ssilcoff@mon.nationalpost