Jefferies Updates ODP 2010 Results

Jefferies has issued an update on Office Depot ODP following an IRS ruling. According to Jefferies, "Office Depot said last night that it received an unfavorable tax ruling that will cause it to restate 2010 results, while adversely impacting anticipated operating cash flow in 2011. It also indicated that 1Q11 EBIT margin would be down 50% y/y (we are currently modeling it down 10%). We remain cautious on this name in spite of the employment recovery as the company continues to be a market share contributor and as earnings quality remains poor." ODP has a Hold Rating and a $5.00 Price Target. ODP closed yesterday at $4.63.