NEW YORK (TheStreet) -- Office Depot (ODP) shares continue to gain on Monday, up 1.86% to $7.93, continuing to rise following reports of a potential merger with office retail rival Staples (SPLS) . Office Depot shares shot up 12% in trading on Thursday when the news initially broke.
Activist hedge fund Starboard Value LP revealed that it increased its stake in the company to 9.9% while also disclosing a 5.1% stake in Staples. Those developments caused the speculation surrounding a possible deal between the two companies to increase.
Concerns about regulatory hurdles may end up keeping the deal from happening however as a 1997 bid by Staples to purchase Office Depot was rejected due to antitrust concerns. Analysts at Zacks upgraded the company to a "strong buy" Monday following Thursday and Friday's strong trading sessions.
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TheStreet Ratings team rates OFFICE DEPOT INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate OFFICE DEPOT INC (ODP) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."