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Investing.com - Morgan Stanley (NYSE:MS) has reiterated its Equalweight rating and $43.00 price target on Fastenal (NASDAQ:FAST) following the company’s second-quarter earnings report. According to InvestingPro data, the stock is trading near its 52-week high of $44, with a notable year-to-date return of 21.7%.
Fastenal posted quarterly earnings per share of 29 cents, matching Morgan Stanley’s estimate and slightly exceeding the consensus expectation of 28 cents. The company maintains strong financial health, earning a "GREAT" rating from InvestingPro’s comprehensive analysis, which considers factors like the company’s 33-year track record of consistent dividend payments and robust cash flow coverage.
The company’s June daily sales increased 9.8% year-over-year, outperforming typical seasonal patterns by approximately 110 basis points, supported by ongoing price action initiatives.
Gross margin came in at 45.3%, exceeding the consensus estimate of 45.0% and improving by roughly 20 basis points quarter-over-quarter, which Morgan Stanley attributes to a combination of price/cost dynamics and product mix.
Morgan Stanley noted that while the second-quarter performance mechanics matched their expectations, Fastenal was able to deliver upside with price realization "pushed right," which the firm views as a positive indicator for the second half of the year.
In other recent news, Fastenal Company announced a two-for-one stock split, which will effectively double the number of shares held by investors. This stock split is set to be executed on May 21, 2025, with shareholders of record as of May 5, 2025, eligible to receive an additional share for each share they currently own. Following this move, Fastenal’s common stock is expected to begin trading on a split-adjusted basis on May 22, 2025. This decision is part of Fastenal’s ongoing expansion efforts, which include over 3,500 locations across 25 countries. Meanwhile, Raymond (NSE:RYMD) James has maintained an Underperform rating on Fastenal’s stock. Analyst Sam Darkatsh noted that while Fastenal has shown strong execution amid challenging market conditions, concerns remain about the company’s valuation, which is considered high. The firm’s growth strategy, primarily reliant on opening new sites with large customers, was highlighted as a potential risk given current market expectations for double-digit sales growth. Despite these challenges, Fastenal continues to manage its operations effectively, although tariffs remain a concern impacting costs and profitability.
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