UPDATE: Bank of America Upgrades Office Depot to Buy, Raises PT on BTE Synergy Potential, New CEO

In a report published Thursday, Bank of America analyst Denise Chai upgraded the rating on

from Underperform to Buy, and raised the price target from $3.50 to $6.50. In the report, Bank of America noted, “With the merger with OfficeMax completed on Nov 5 and the stock down 10% since 11/1, we are turning positive on the potential for cost synergies, particularly with the announcement of a new outside CEO with substantial turnaround experience. We are moving to a Buy rating and lifting our PO to $6.50 (21% upside potential), now based on 5.4x 2015E EV/EBITDA (previously $3.5 based on 0.1x Price/Sales for stand-alone ODP). On a P/E basis, our PO is based on 12x 2015E EPS vs. 9x for SPLS. Our new estimates for the combined entity are: $(0.02) EPS in 2013 based on a (2.8)% comp, $0.32 EPS in 2014 (-2% comp); $0.54 EPS in 2015 (flat comp) and $0.76 EPS in 2016 (flat comp). Our previous ests were ($0.05), $0.05 and $0.09 for ODP stand-alone from 2013-15.” Office Depot closed on Wednesday at $5.38.