Office supply giant Staples, Inc. (
) on Monday caught a big upgrade from analysts at Janney Montgomery
Scott, sending its shares higher in premarket trading.
The firm upgraded SPLS from "Neutral" to "Buy" with a $27 price
target. That target implies a 19% upside from the stock's Friday
closing price of $22.77.
A JMS analyst commented, "Concurrently, we are raising our 2011
EPS estimate to $1.57 (previously, $1.53), ahead of consensus of
$1.54. Our fair value estimate goes to $27 (previously, $21) based
on a 17x multiple on our 2011 EPS estimate."
Continuing, "We believe that Office Depot (
) and OfficeMax (
) - both on an absolute and relative basis - provide for higher
potential returns over the medium term. However, risk-reward is
stronger for SPLS as downside is more limited due to its ability to
effectively manage the P&L and utilize the balance sheet in
Staples shares jumped 98 cents, or +4.3%, in premarket trading
The Bottom Line
Shares of Staples (
) have a 1.58% dividend yield, based on Friday's closing stock
price of $22.77. The stock has technical support in the $19 price
area. If the shares can firm up, we see overhead resistance around
the $23-$24 price levels.
Staples, Inc. (
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.4 out of 5 stars.
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, as well as a detailed explanation of
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