Goldman’s $10 target on Office Depot (ODP), currently below $7, may look like a ringing endorsement, but in reality the bank wants nothing to do with this stock.
Goldman sees “economic headwinds” impacting all areas of business for ODP. However, they believe the fact that the company finally has enough money may give the stock a tiny lift:
Stiff macro headwinds will likely impede results for some time, and the retail segment off the office products business may be structurally flawed, given through prolific competition and over-storing. That said, given the blows to earnings in recent quarters, aggravated by some factors (i.e. shrink) that are unlikely to recur, and ODP’s sharp underperformance vs. “normalized” margins, the realisation that liquidity is not a near-term issue could yield a bounce for ODP off depressed levels.
Goldman maintains NEUTRAL on Office Depot (ODP), target $10.
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