Color on Office Depot (ODP) Downgrade: Market 'Overly Optimistic' on Turnaround
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Color on today's analyst downgrade of Office Depot (NYSE: ODP):
Earlier, Credit Suisse lowered its investment rating on shares of Office Depot from Neutral to Underperform.
The firm believes that even in light of a recent sell-off (the stock is down 23% since mid-October), the market is being overly optimistic on the company's turnaround. Credit Suisse no longer feels that Office Depot will be able to continue margin growth at a pace that would support current valuation.
"We believe that the market is being too dependent on macro trends and on the assumption that when these trends reverse, margins will return to prior levels."
Despite broader markets which are up about 1% amid better-than-expected economic data, shares of Office Depot are moving about 1.7% lower, most recently trading at $5.95.
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