William Blair analyst Ryan Merkel reiterated a Market Perform rating on MSC Industrial (NYSE: MSM)

The analyst commented, " Shares are trading down on a mixed second quarter but third quarter guided above. Sales optimization impacts drove a disappointing second-quarter ADS result with volumes decelerating and have led to a slower March. While we understand investor trepidation about the overhang and duration of these impacts, we believe the changes were necessary and should drive a better sales organization long term. Management sounded confident that impacts will be short-lived, but we are taking a cautious approach to April and May acceleration (especially amid macro uncertainty). Incrementals were a positive with second quarter above 20% and third quarter guided to 25%. Incrementals have been price/cost and SG&A cut driven, any volume improvement could drive even further upside. Overall, we continue to take a cautious stance here. MSM remains a “show me” story, and while incrementals have been a positive recently, we would like to see volumes improve and IP outgrowth return to 400-plus basis points before turning more positive."

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Shares of MSC Industrial closed at $92.27 yesterday.