Analyst cuts Staples target, predicts stock slump

Friedman Billings Ramsey analyst Stephen Chick maintained his "Underperform" rating on the company's stock, but reduced his price target to $20 from $22. The new target implies an 11 percent drop from the stock's Tuesday closing price of $22.50.

The company's share price is down about 7 percent since the beginning of September, compared with a 14 percent drop in the S&P 500 over the same period.

"We think there is further room to decline for (Staples)," Chick wrote in a research note, adding that the company's stock would likely continue to fall ahead of an analyst meeting in late October.

Chick said the Framingham, Mass.-based retailer likely faces headwinds from the withering U.S. economy, and the company's sales to small businesses are already showing weakness. He added that the company's European contract division--former Dutch office supplier Corporate Express--will likely face "heated competition" from the private company Lyreco.

Staples shares fell 37 cents to $22.13 in morning trading.