Morgan Stanley Raises PT On FAST To $60

Morgan Stanley, citing better number than expected, is raising its price target on Fastenal Company FAST from $55 to $60. According to Morgan Stanley, “FAST posted slightly better than expected numbers with EPS of $0.54 vs. cons of $0.52 and revs of $641M (up 23% y/y) vs. cons of $630M. GM of 52% also good considering higher margin fasteners were only 48% of sales vs. 50% last yr. Incremental margins of 32% declined from ~40% in 2010 but still very good. Given recent run up in FAST shares post MSM results and that FAST looks priced for perfection at 24x 2012E, stock reaction Tues was not totally unexpected. We are tweaking up 2011E EPS to $2.30 from $2.20 and 2012E to $2.75 from $2.63 due to higher growth & incremental margin expectations. Our PT goes to $60 from $55.” Morgan Stanley maintains its Underweight rating on the stock. FAST closed at $64.67 yesterday.