Nomura Securities on Office Product Super Stores; Mom and Pop Still Beating Scale Players

Nomura Securities on Office Product Super Stores; Mom and Pop Still Beating Scale Players...No Real Signs for Optimism

Analyst, Aram Rubinson, said, "So far, retail investors have shrugged off news from supplier earnings reports. Masco reported sobering figures, yet Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW) have maintained their upward trajectory. United Stationers is the industry’s leading wholesaler. Acco Brands (NYSE: ABD) reported fine profit results, although top-line results were not as strong. Since Q1/2008, the OP super stores have underperformed the average sales growth of United Stationers (Nasdaq: USTR), Genuine Parts (NYSE: GPC) and ABD by 2.8%. Street expectations for Q4 appear to embed a reversal of this trend, as they call for a 2.6% advantage to the same group of suppliers. We rate all three of the OP super stores Neutral, with target prices of $3.30 (OfficeMax (NYSE: OMX)), $6 (OfficeDepot (NYSE: ODP)) and $13 (Staples (Nasdaq: SPLS)). Our model calls for Q4 comps of -3%, -2% and -2%, respectively, compared with the Street at -1%, -1% and +0.5%."

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