Morgan Stanley on Office Depot; PT of $6.35

In a research note released Monday, Morgan Stanley analyst Simeon Gutman initiated coverage on Office Depot

with an Equal-weight rating and a price target of $6.35. The analyst likes management's approach and sees synergy upside potential, and the fact that the stock increasingly reflects this. The analyst is currently estimating synergies at 900 million, which is well above the company's guidance if 675 million. The analyst's model also assumes 400 sore closures. The analyst continued by stating that the estimates truly start to differ in this area, the core business. The analyst currently believes that this area will see sales decline from two to three percent, gross margin erosion, and expense deverage. Shares of the company are down 1.06 percent today and are up 5.86 percent year-to-date.