Ahead of the Bell: OfficeMax downgraded

Piper Jaffray analyst Mitchell A. Kaiser cut his rating to "Neutral" from "Buy" and his price target to $11 from $22. The new target implies he expects shares to slide about 10 percent from Tuesday's $12.18 close.

The downgrade comes the day after Office Depot blamed weak economic conditions for its guidance change, and its shares touched a nearly eight-year low.

"While we believe OfficeMax is a better company with better margin stability, we believe industry fundamentals for office product retailers are continuing to deteriorate," Kaiser said in a note to clients.

The Naperville, Ill., company's stock has dropped more than 41 percent so far this year.

"In the current macroeconomic environment, executing a turnaround is much more difficult and operating margin is starting to drift back down," he said.

Investors, Kaiser said, should stay on the sidelines until either operating margins improve or OfficeMax uses some of its free cash flow to buy back stock.

A company representative was not immediately available for comment.