Staples (SPLS) is a 'Self-Help' Story - Nomura
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Price: $14.75 +0.55%
Rating Summary:
3 Buy, 11 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Rating Summary:
3 Buy, 11 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Trade SPLS Now!
Nomura Securities sharply raised its price target on Staples, Inc. (NASDAQ: SPLS) from $12 to $16 but stopped short of lifting its Neutral rating.
"Staples has begun to swallow a few bitter pills," Aram Rubinson states. He highlights that in September 2012 SPLS took a restructuring charge as it decided to close 15 US stores and 45 abroad, ultimately looking to trim its footprint by 15% or more. Staples also hired a talented executive to run International, and it refinanced $1B worth of 9.75% debt with average rates of 3.5%. Congruently, Lowe's decided to shut 20 underperforming stores a year earlier.
"We applaud SPLS for adding "self-help" as a potential catalyst for the share price," the analyst said.
"Unlike Lowe's, Staples does not have a housing rebound waiting for it on the other side. Despite that, we believe there is still some merit to the investment case. Our new target price reflects that. Long-term, SPLS will likely struggle to add value with merchandise margins at retail that are too high at ~40%. That is why we feel compelled to remain Neutral on the shares."
The firm raised FY12E EPS from $1.32 to $1.37; FY13E EPS from $1.25 to $1.41.
For an analyst ratings summary and ratings history on Staples, Inc. click here. For more ratings news on Staples, Inc. click here.
Shares of Staples, Inc. closed at $12.98 yesterday, with a 52 week range of $10.57-$16.93.
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"Staples has begun to swallow a few bitter pills," Aram Rubinson states. He highlights that in September 2012 SPLS took a restructuring charge as it decided to close 15 US stores and 45 abroad, ultimately looking to trim its footprint by 15% or more. Staples also hired a talented executive to run International, and it refinanced $1B worth of 9.75% debt with average rates of 3.5%. Congruently, Lowe's decided to shut 20 underperforming stores a year earlier.
"We applaud SPLS for adding "self-help" as a potential catalyst for the share price," the analyst said.
"Unlike Lowe's, Staples does not have a housing rebound waiting for it on the other side. Despite that, we believe there is still some merit to the investment case. Our new target price reflects that. Long-term, SPLS will likely struggle to add value with merchandise margins at retail that are too high at ~40%. That is why we feel compelled to remain Neutral on the shares."
The firm raised FY12E EPS from $1.32 to $1.37; FY13E EPS from $1.25 to $1.41.
For an analyst ratings summary and ratings history on Staples, Inc. click here. For more ratings news on Staples, Inc. click here.
Shares of Staples, Inc. closed at $12.98 yesterday, with a 52 week range of $10.57-$16.93.
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