Analyst upgrades Staples, says it may need to boost Corporate Express offer again for buyout
NEW YORK (AP) -- An analyst upgraded Staples Inc. Wednesday and said the chances the retail office chain will acquire Corporate Express NV have increased, though it may need to raise its bid.
Jefferies & Co. analyst Daniel Binder raised his rating to "Buy" from "Hold" and his price target to $28 from a range of $20 to $22. The new target implies he expects shares to rise 25 percent from Tuesday's $22.44 close.
Framingham, Mass.-based Staples on Tuesday boosted its takeover offer for the Netherlands-based office products company by 10 percent to $2.47 billion, or 8 euros per share. Corporate Express said the revised offer is still too low.
Binder said the deal may need to rise to 8.50 euros before a deal is completed. He believes a deal could boost Staples' earnings by as much as 60 cents per share.
"Staples has been widening the gap between itself and its competitors for the last decade and this proposed acquisition will likely increase its lead from both a sales and profitability standpoint," Binder said in a note to clients.
For 2008, Binder expects profit of $1.41 per share. Analysts polled by Thomson Financial expect, on average, earnings of $1.50 per share.
Shares rose 36 cents to $22.80 in premarket trading Wednesday.