Staples Upgraded to “Buy” at Janney Montgomery Scott (SPLS)

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Office supply giant Staples, Inc. ( SPLS ) 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 ( ODP ) and OfficeMax ( OMX ) - 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 different economies."

Staples shares jumped 98 cents, or +4.3%, in premarket trading Monday.

The Bottom Line
Shares of Staples ( SPLS ) 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. ( SPLS ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: ODP , OMX , SPLS

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