Credit Suisse Reinstates MSC Industrial (MSM) at Underperform
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Credit Suisse earlier reinstated coverage on MSC Industrial (NYSE: MSM) with a Underperform rating and a price target of $65. Analyst Andrew E. Buscaglia noted lack of catalysts and stretched valuation.
"We see prolonged weak pricing resulting in a muted top line for MSM in 2017. Mix issues continue to erode gross margins, putting pressure on the operating line where we see potential for further declines. MSM is most levered to manufacturing (~68% of sales) in our group where customers are struggling. Our Fixed Income Strategy Team sees US manufacturing delivering a similar 2H as weak global conditions persist, offsetting recent stabilization in energy/mining. We appreciate MSM's supply chain investments and cost reductions positioning itself for higher margins on minimal sales, yet a difficult environment may mean trough margins are further out than expected," said Buscaglia.
Shares of MSC Industrial closed at $74.03 yesterday.
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