Citigroup reiterated its “Buy” rating on Office Max (NYSE: OMX), saying that the valuation for the company is still attractive, but Goldman Sachs’ most recent analysis of the company believes that the company has reached its price target and is no longer attractive.
Citi analyst comments on competition, “We believe that pricing pressure from Wal-Mart (NYSE: WMT), Amazon (Nasdaq: AMZN) and other mass market players may be causing office retailers to pull back on Retail expansion and instead focus on Delivery where margins are higher. We believe that this phenomenon could continue longer term, leading to potential near term consolidation and acquisitions in the Delivery space.”
Citi analyst still positive on OMX, “Our Buy rating is based on the co’s lean cost structure, prudent inventory management, potential for share gains and attractive valuation. While mgmt has stated it does not expect to see an economic recovery until 2H’10, we continue to believe that eventually when the economy does recover OMX will receive a meaningful benefit to op. margins as many of the costs lately taken out of the business will likely not return when volume growth resumes. Despite being up 30% YTD, the stock is still trading below its 5 year average.”
On March 22nd, Goldman Sachs downgraded Office Max from a “Buy” rating to a “Neutral” rating, stating that the company has approached Goldman’s price target for the stock of $18.50.
