William Blair on MSC Industrial (MSM): cautious stance, MSM remains a 'show me' story

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."

For an analyst ratings summary and ratings history on MSC Industrial click here. For more ratings news on MSC Industrial click here.

Shares of MSC Industrial closed at $92.27 yesterday.

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