Jefferies Cuts Price Target on Staples (SPLS) Following 4Q Miss and Soft Guidance

Jefferies maintained a Buy rating on Staples, Inc. (NASDAQ: SPLS), and cut the price target to $17.00 (from $20.00), following the company's 4Q earnings report. EPS of $0.26 missed the Street’s view of $0.28 as topline sales were soft, reflecting a 5% comp store sales decline at retail and flat sale in local currency for the delivery business. Management guided Q1 EPS for $0.16-$0.18 and is also guiding to EPS growth for the year. This was surprising given the soft sales results in Q4 and the projected higher tax rate for the year.

Analyst Daniel Binder commented, "We have maintained our Buy rating because unlike the FTC, we believe price constraints exist in the market and believe there is some chance the court will see that too. Meanwhile, our bias for Q4 was to sales weakness and that is what we saw, particularly retail and delivery. FY17 guidance for EPS growth was better than expected even w/ a higher tax rate and recent sales softness, reflecting investments to grow top-line and costs out."

For an analyst ratings summary and ratings history on Staples, Inc. click here. For more ratings news on Staples, Inc. click here.

Shares of Staples, Inc. closed at $9.60 yesterday.

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