Update (9:35 a.m.): Updated with Friday market open information.
NEW YORK (TheStreet) -- J.P. Morgan reduced its target price on Staples (SPLS) to $12, reduced its estimates and set a "neutral" rating. The firm cited the company's declining sales as the reason for the reduction.
The stock was rising 0.31% to $11.39 at 9:36 a.m. on Friday.
Separately, TheStreet Ratings team rates STAPLES INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate STAPLES INC (SPLS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 122.7% when compared to the same quarter one year prior, rising from -$596.25 million to $135.23 million.
- The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 is somewhat weak and could be cause for future problems.
- STAPLES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STAPLES INC swung to a loss, reporting -$0.25 versus $1.41 in the prior year. This year, the market expects an improvement in earnings ($1.23 versus -$0.25).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.5%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: SPLS Ratings Report