We may not live in a paperless world yet, but Goldman Sachs analyst Matthew Fassler sees trouble ahead for office supply companies, which have not benefited much from improving employment trends.
Staples (SPLS) shares could slip as operating earnings should show little growth this year. Even with dividends, total return for Staples investors will likely be flat, Fassler argues.
Numerous trends are working against Staples and its peers: the amount of paper consumed per employee is in a downtrend; purchasing officers expect spending on office supplies to pick up more slowly than spending in other categories; and the office supply companies do not generally sell Apple (AAPL) products, which continue to take market share.
Fassler downgraded Staples to Sell, with a $15.75 price target. Shares were recently down 4.8% to $15.24.
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