BofA update shows where active managers are putting money
Investing.com - BofA Securities has raised its price target on Fastenal (NASDAQ:FAST) to $49.00 from $42.50 while maintaining a Buy rating following the company’s second-quarter earnings report. The stock, currently trading near its 52-week high of $46.04, has delivered an impressive 35.8% return over the past year. According to InvestingPro analysis, the company’s shares appear to be trading above their Fair Value.
Fastenal reported second-quarter earnings on July 14, with earnings per share of $0.29 matching BofA’s estimate and exceeding the consensus forecast of $0.28. The company outperformed consensus expectations on sales, gross margin, and operating margin, with EBIT of $436 million surpassing BofA’s $434 million estimate. InvestingPro data shows the company maintains strong financial health with a 45% gross profit margin and has consistently paid dividends for 33 consecutive years.
The financial services firm noted that Fastenal’s slightly positive price/cost ratio and year-over-year gross margin expansion, driven by inventory changes and mix, produced 30% incrementals and helped address investor concerns that the company might be discounting to gain market share.
BofA Securities raised its 2025 EPS forecast for Fastenal to $1.12 from $1.11, citing better sales growth partially offset by higher employee expenses. The firm also increased its 2026 EPS forecast to $1.27 from $1.25.
The new price target of $49 is based on 26x BofA’s 2026 EV/EBITDA estimate, up from the previous 23x multiple, representing a premium to peers trading at 16x 2025 estimates. BofA highlighted that Fastenal is the only distributor in its peer set where both the firm and Street forecast double-digit EPS growth in both 2025 and 2026.
In other recent news, Fastenal has reported its Q2 2025 earnings, showcasing a strong performance with earnings per share (EPS) of $0.29, surpassing forecasts by 3.57%. The company’s revenue reached $2.08 billion, marking an 8.6% increase and surpassing the $2 billion mark for the first time. UBS maintained a Neutral rating for Fastenal, noting the company’s accelerating sales growth and strategic focus on larger customer shares. JPMorgan also maintained a Neutral rating but raised its price target to $41, citing strong margins and a positive outlook on pricing adjustments. Fastenal’s digital sales have expanded to account for over 30% of total sales, reflecting the company’s advancements in e-commerce capabilities. The company has also seen significant growth in contract customer sales, which increased by 11% and now represent 73.2% of revenues. Despite positive results, JPMorgan highlighted concerns about Fastenal’s valuation, which trades at historically high levels. Fastenal plans to continue implementing pricing actions and investing in digital capabilities to sustain its growth trajectory.
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