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Ahead of the Bell: Barnes & Noble

NEW YORK (AP) -- A Janney Capital Markets analyst on Thursday downgraded Barnes & Noble Inc. to "Neutral," saying that while it's likely that the company will eventually reach a deal to sell some of its assets, it's unclear when that will happen.

Barnes & Noble Inc. shares have risen in recent weeks on media reports that Microsoft is considering an outright purchase of its Nook e-book and e-book reader business.

Leonard Riggio, Barnes & Noble's founder, also has offered to buy the physical bookstores and website of Barnes & Noble, but not the Nook unit. No terms or other details have been announced.

Analyst David Strasser said that while it's likely that Barnes & Noble will be able to sell off one or more of its assets in the near to medium term, he doesn't know when that will happen. As a result, the company's risk and reward are properly balanced right now, he said.

"We do believe that this management team has done a fantastic job creating value for shareholders despite some rather dramatic headwinds to the business that have appeared in the past few years," Strasser wrote in a note to investors.

"We also continue to believe that Barnes & Noble stores remain one of the best shopping experiences in all of retail."

The analyst said that depending on the outcomes of the company's asset sales, its shares could trade from the mid-teens dollar range, assuming no sales take place, to the low $30s, if there is a full breakup of the company.

Its shares closed at $21.29 on Wednesday. They have traded in a 52-week range of $11.17 to $23.71.