Nov. 3 (Bloomberg) -- Office Depot Inc. slumped as much as 20 percent after Credit Suisse Group AG questioned the ``quality'' of the retailer's third-quarter results and said shares are ``expensive'' after more than doubling last week.

There was ``nothing good to point to'' in Office Depot's operations last quarter, wrote Gary Balter, a New York-based analyst at Credit Suisse, in a report. The second-biggest office- supply retailer may be boosting results by getting more cash up front from ``vendor support'' agreements with suppliers, which could help profit but also increase costs longer term, he said.

``Rather than working out of the hole that management has dug itself into, they seem to be digging deeper,'' Balter wrote.

Office Depot shares surged the most in the Standard & Poor's 500 Index last week after the company said it will review its assets and may close North American stores. The company also said it has sufficient cash on hand.

The gains made the stock expensive, according to Balter, who said Office Depot is his ``least favorite'' among the three biggest U.S. office-supply retailers.

The Delray Beach, Florida-based retailer should merge with OfficeMax Inc. so the companies can compete with Staples Inc., the largest office-supplies seller, amid deteriorating trends in the business, Balter said.

Office Depot slid 20 percent to $2.89 at 2:22 p.m. in New York. The stock has lost 74 percent this year before today, compared with a 34 percent decline in the S&P 500.

To contact the reporter on this story: Elizabeth Campbell in New York at ecampbell11@bloomberg.net

Last Updated: November 3, 2008 14:28 EST