Citi Remains on the Sidelines for Staples

Citi remains on the sidelines for Staples, Inc. SPLS due to: “1) 1Q comments surrounding more competitive trends in contract. “2) Guidance reduction for FY12 (lowered 10% at the midpoint) leading to a reset of consensus estimates and multiple given diminished prospects for earnings growth. “3) Lack of near term catalysts for upside on weaker than expected Q2 and top-line outlook.” “With the recent (10%) guide down to FY12, we find it hard to recommend the stock,” Citi continues. “The company's current outlook takes into account expectation for minimal improvement in the economic backdrop, continued expense pressures from growth investments, and more aggressive pricing in Contract.” Staples closed Thursday at $16.44.