Morgan Stanley Maintains Equal-Weight on Sysco (SYY)

Morgan Stanley is out with its report today on Sysco SYY, maintaining Equal-weight. In a note to clients, Morgan Stanley writes, "Case volume growth and gross margins surprised to the upside, but we do not believe that this reflects a turn in Sysco's operating environment. The restaurant industry confronts steadily increasing inflation, an uneven economic recovery, and consumers weakened by high gas prices. Sysco also faces EPS headwinds going forward from heavy spending on its business transformation project that will weigh on earnings until 2014. Without confidence of a sustained volume recovery going forward, at current levels we see limited upside to SYY shares. We remain Equal-weight." At the time of posting, shares of SYY were trading pre-market at $30.99, down 1.84% from Monday's close.