OfficeMax share rise as analyst starts coverage

Soleil Securities Group analyst Scott Tilghman initiated coverage of the company with a "Hold" rating.

He said the company is "firmly entrenched" in its turnaround activities, working to streamline operations, improve both retail and contract interfaces, and unify its back-office platforms.

However, he said the company is facing a weak retail environment and heightened competition. He also has geographic concerns.

"With 83 percent of the company's revenues derived in the U.S. and a full third of the retail stores concentrated in the Midwest, we believe the company's lack of regional diversification relative to its competitors may hinder near-term upside," he wrote.

However, investors were undeterred, sending shares up 60 cents, or 4.2 percent, to $14.86 during midday trading.

It was a reversal for OfficeMax shares, which faced a tough June. During the month Standard & Poor's removed the company from its S&P 500 index, citing a decline in Naperville, Ill.-based OfficeMax's market value, and Credit Suisse analyst Gary Balter downgraded the stock to "Neutral" from "Outperform" because of the weak economy and tough competition.

Since the beginning of the month, shares have fallen 34 percent, including reaching a 52-week low on Tuesday.