Ahead of Office Depot’s (ODP) upcoming 4Q17 results, most analysts covering the stock have maintained a “hold” rating. Of the eight analysts covering the stock, 63% have recommended a “hold,” 12% have recommended a “buy,” and the remaining 25% have recommended a “sell.”
Office Depot is expected to report a 4.1% decline in sales, and adjusted EPS (earnings per share) is expected to be $0.07 compared with $0.11 per share reported in 4Q16.
Office Depot’s troubles have been many. The arrival of online retailers, especially Amazon, a shift toward digital, and a tough retail landscape have made it a highly challenging situation for Office Depot. The failed merger bid with Staples was another big blow.
However, with Gerry Smith taking over as the company’s new CEO (chief executive officer) in February 2017, the company is now changing to a business services solutions provider. Office Depot recently acquired CompuCom Systems, a major IT (information technology) services, products, and solutions provider to SMBs (small and medium businesses). Office Depot is also focusing on its core operations by cutting costs, streamlining its supply chain, and adding more products to its portfolio. It recently acquired four small office suppliers to expand in the mid-markets.
Currently, analysts’ 12-month average target price for the company is $4.10, which reflects a 36.2% upside to the stock price as of February 20, 2018.
Where do peers stand?
Of the 11 analysts covering Genuine Parts (GPC), ~64% have given it a “hold” rating. For Best Buy (BBY), ~68% of the 25 analysts covering the stock have recommended a “hold.” About 52% of the analysts covering Kohl’s (KSS) stock have given it a “hold” rating.
Currently, analysts’ target price for Genuine Parts is $98.25, reflecting a 3.8% upside to its stock price as of February 20, 2018. For Best Buy, the mean target price is $67.23, which indicates a 6.5% downside to its stock price as of February 20, 2018. For Kohl’s, the target price is $65.35, implying a 1.5% upside to the stock price as of February 20, 2018.