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Analyst more upbeat on OfficeMax-Office Depot

NEW YORK (AP) -- A Janney Capital Markets analyst said Thursday he is becoming more optimistic about the combination of OfficeMax Inc. and Office Depot Inc., saying their earnings as a combined company could be almost double what they are achieving separately.

THE OPINION: Analyst David Strasser said he downgraded shares of both companies to "Neutral" after they agreed to combine in February. Strasser said the stocks wouldn't trade much higher while the deal was reviewed by regulators.

But after a meeting with OfficeMax management, Strasser said he thinks the two companies could attain earnings before interest, taxes, depreciation and amortization of more than $1 billion per year. That's compared to about $550 million for the two companies on their own today.

Office Depot and OfficeMax announced an agreement in February to combine in an all-stock deal worth about $1.2 billion. Strasser said both companies are "solid," but have limited opportunities. Together, however, they can offer a much wider range of products and services to businesses.

THE STOCK: Shares of OfficeMax declined 6 cents to $12.01 in afternoon trading, and Office Depot shares lost 3 cents to $4.07.