Sector Snap: Office Depot Falls, OfficeMax Rises

SAN FRANCISCO (AP) — Shares of Office Depot Inc. fell for a second day Friday as rival OfficeMax Inc. rose, after a Janney Montgomery Scott analyst said OfficeMax was in better position to increase profit growth following its turnaround efforts.

Analyst David Strasser said Office Depot, on the other hand, faced a "bumpy" turnaround effort of its own.

Strasser put a "Buy" rating on OfficeMax when it initiated coverage of the sector on Wednesday.

He rated Office Depot "Neutral" telling investors that Office Depot would have to deal with how to invest in the business using its "still fragile" cash on hand, while also maintaining its improved liquidity.

Meanwhile, Strasser said OfficeMax's turnaround is "gaining traction" with an improved balance sheet and leaner operating structure.

OfficeMax shares rose 54 cents, or 4 percent, to $13.72, after falling 1 percent to close at $13.18 on Thursday.

Office Depot fell 16 cents to $6.22 in afternoon trading. On Thursday, the stock fell 5 percent to $6.38.

Strasser also put a "Neutral" rating on Staples Inc. and said it will gain market share in the "fragmented office products industry" but that it could suffer since office suppliers recover more slowly from a recession than other types of retailers.

Staples shares rose 51 cents to $23.32.