Staples Up 14% On Rivals Merger Talk

The leading stock indexes are up a fraction in early trading Tuesday.

The biggest gainer on the Standard & Poor’s 500 index this morning is Staples (SPLS), up 14% after rivals Office Max (OMX) and Office Depot (ODP) were said to be in merger talks.

Analysts broadly see a merger between Offices Max and Depot as a positive for Staples. Brian Nagel at Oppenheimer writes this morning:

Despite a number of fundamental missteps lately, we view SPLS as well positioned to benefit from more rationalized competition within the office products sector.

Analysts at Janney Capital Markets are even more bullish:

SPLS is the big winner and will gain market share from store closures, a multi-year restructuring, and a company overwhelmed by integration initiatives. Apart from accretion to earnings, we would expect multiple expansion at SPLS as details of the deal become public. We are raising our fair value on SPLS from $13 (previously, $17) to reflect a 12x P/E multiple as we believe the market will revalue SPLS in the wake of massive consolidation in the space.

Also rising are shares of bubble wrap maker Sealed Air (SEE), up about 10% after it swung to a fourth-quarter profit. While Sealed Air’s full-year profit guidance was below analyst expectations, its revenue forecast came in ahead of consensus view.

Express scripts (ESRX) stock is up more than 3% after its earnings rose 74% and its full-year outlook was rosier than expected. As Dow Jones Newswires Jon Kamp writes:

Express scripts CEO George Paz sounds much more upbeat on today’s 4Q call than on November’s 3Q call, when company cautioned about still-tough economic challenges. ESRX’s 2013 guidance wound up largely better than Street expectations — which company helped pull lower with negative November comments — and Paz is painting picture of bright future. “We are bullish on the PBM industry and in particular on our strategic positioning,” he says.