Jefferies Raises Price Target on MSC Industrial (MSM), Strong Q2 Results & Q3 Guidance
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Price: $119.81 +1.79%
Rating Summary:
7 Buy, 20 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
7 Buy, 20 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Jefferies is raising its price target from $70 to $80 on shares of MSC Industrial (NYSE: MSM) due to strong Q2 earnings and positive Q3 guidance, maintaining Neutral rating based on valuation.
The company reported its Q2 earnings with an EPS of $0.78 which increase 61% Y/Y and is well ahead of the firm and street estimates of $0.69 and $0.70.
The upside was driven by sales that experienced an increase of 22% while core sales increased 21%. Manufacturing sales rose 24% across the board while non manufacturing sales increase 12%. Operating margin rose 410 bps to 16.7% and incremental margin improved for the fourth straight quarter.
MSM released its Q3 guidance with an EPS range of $0.90-$0.94, and combined with the Q2 beat, Jefferies is raising its FY11 EPS estimate by $0.23 to $3.30 and its FY12 by $0.25 to $3.73.
The firm comments that, "We believe the stock, based on the earnings track record and current fundamentals, warrants a premium valuation to the peer group of Industrial Distributors. Over the last 10 years, MSM's premium has averaged 20%, although in the last 5 years 5%, which we attribute to maturation. It is a better company today, and believe a 10%-15% premium is appropriate. But MSM is trading at 20% premiums, owing partly to the stock's 6% rise on Wednesday."
For more ratings news on MSC Industrial click here and for the rating history of MSC Industrial click here.
Shares of MSC Industrial closed at $75.04 yesterday.
The company reported its Q2 earnings with an EPS of $0.78 which increase 61% Y/Y and is well ahead of the firm and street estimates of $0.69 and $0.70.
The upside was driven by sales that experienced an increase of 22% while core sales increased 21%. Manufacturing sales rose 24% across the board while non manufacturing sales increase 12%. Operating margin rose 410 bps to 16.7% and incremental margin improved for the fourth straight quarter.
MSM released its Q3 guidance with an EPS range of $0.90-$0.94, and combined with the Q2 beat, Jefferies is raising its FY11 EPS estimate by $0.23 to $3.30 and its FY12 by $0.25 to $3.73.
The firm comments that, "We believe the stock, based on the earnings track record and current fundamentals, warrants a premium valuation to the peer group of Industrial Distributors. Over the last 10 years, MSM's premium has averaged 20%, although in the last 5 years 5%, which we attribute to maturation. It is a better company today, and believe a 10%-15% premium is appropriate. But MSM is trading at 20% premiums, owing partly to the stock's 6% rise on Wednesday."
For more ratings news on MSC Industrial click here and for the rating history of MSC Industrial click here.
Shares of MSC Industrial closed at $75.04 yesterday.
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