Staples (SPLS) Stock Gains on Ratings Upgrade, Potential Asset Sale
NEW YORK (TheStreet) -- Shares of Staples (SPLS) are climbing 3.02% to $8.35 Monday afternoon after Bank of America/Merrill Lynch upgraded shares and London's Sunday Times reported that the office supply company might sell European assets.
The firm upgraded shares two notches to "buy" and put a $10 price target on the stock, citing potential upside as Staples downsizes its retail footprint and considers exiting its European business, CNBC.com reports.
"In addition to valuation, we see the potential for earnings upside as SPLS refocuses on its core strengths," BofA/Merrill Lynch analysts wrote in a note.
Additionally, Staples has reached out to a number of buyout firms to shop its European assets, sources told the Times.
The stock has declined more than 18% since its planned merger with Office Depot (ODP) failed earlier this month.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.
Staples' strengths such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity are countered by weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow.
You can view the full analysis from the report here: SPLS
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
