UPDATE: KeyBanc Upgrades Office Depot to Buy, Names $4.80 PT on Merger Announcement

In a report published Monday, KeyBanc analyst Bradley B. Thomas upgraded the rating on Office Depot

from Hold to Buy, and named a $4.80 price target. In the report, Thomas noted, “We are upgrading our rating on shares of Office Depot, Inc. (ODP-NYSE) and OfficeMax Incorporated (OMX-NYSE) to BUY from HOLD...we see a favorable risk/reward following the announcement of a merger between the two companies. While we believe our upgrade call may be somewhat early, as the merger is likely a 2014-2016 story, we view ODP-OMX as a compelling opportunity particularly for value and special situation investors...We believe the FTC is likely to approve the deal, as industry competitive dynamics have changed greatly since the 1997 landmark rejection of the Office Depot-Staples attempted merger. We believe there is confusion around terms of the merger, namely the lack of details (such as who will be CEO). We expect the board and management will act rationally through this process, and expect the stocks' outlooks to improve once there is an official ‘story' and a ‘storyteller' in place.” Office Depot closed on Friday at $4.01.