Staples Inc. stock was upgraded to buy from neutral at Janney Capital Markets Wednesday, while Office Depot Inc. stock was cut to neutral from buy, after Staples said it is buying Office Depot in a $6.3 billion deal. "Financially this transaction makes sense and is necessary for the long term health of these two companies," analysts wrote in a note. However, the change in risk/reward led to the rating changes, with Janney forecasting about 10% upside, but substantial downside if there a deal hiccup. Staples shares slid 10.8% in midmorning trade, while Office Depot edged up 1.4%.
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