UBS Maintains a 'Neutral' on WW Grainger (GWW); Mining the Benefits of Scale; Raising estimates

UBS maintains a 'Neutral' on WW Grainger (NYSE: GWW), PT increased by $10 to $155.

UBS analyst says, "We think that key to very strong 1Q performance was GM rising 180bp to 44% as GWW lever aged its scale and growth profile with suppliers to manage product inflation. Myriad growth initiatives (adding SKUs, sales expansion, eCommerce) also seem to be fueling share gains. We see continued strong revenue and margin momentum in 2011/12 but see the pace of gains moderating as comps toughen, growth investments accelerate, and price give backs naturally occur."

"We're raising our 2011 and 2012 EPS to $8.55 and $9.50 from $7.90 and $8.90, respectively, reflecting better than expected performance (i.e. benefits) in the face of inflation, stronger results in Canada/other international, and a modestly better top line outlook. We now see 2011 organic revenue growth of 8.6% vs. 8.1% previously and 2011 EBIT margins expanding 150bp to 13% vs. 12.1% previously."

For more ratings news on WW Grainger click here and for the rating history of WW Grainger click here.

Shares of WW Grainger closed at $145.32 yesterday.

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