Piper Jaffray Reiterates Overweight Rating on Fastenal (FAST)

Piper Jaffray is out with a research report this morning, where it reiterates its Overweight rating on shares of Fastenal Company FAST; it has a $63.00 price target on the stock. The Piper Jaffray analysts said, “Checks confirm our 2Q view. Our checks confirmed our view for 2Q as much of the feedback we received indicated that sales continue to progress from month to month with the most positive reports largely coming from the Midwest, while the Northeast and California represented more mixed reports that leaned toward flat monthly sales. We are conservatively estimating flat sequential daily sales relative to May during the month of June that reflect some moderation in y/y growth (18.5%) from the ~21% in May. Historically speaking June sales typically would be 2% - 4% better than May.” “While we would not be surprised to see a similar step up this year, we do think some moderation could take place in the months ahead as end market inventory levels are likely to remain low and 2H manufacturing growth seems likely to moderate somewhat. We continue to believe that moderating pricing pressure and company initiatives should combined translate to 300+ bps y/y improvement in operating margins for the quarter.” They also noted, “Sales to non-residential construction customers improved in terms of y/y comparisons over the past 4 months with April being only slightly negative and May reaching positive territory. Continued y/y improvement would be an incremental positive, as expectations were for non-residential construction customer sales to remain weak for an extended period. Progress in the segment could potentially offset some moderation on the manufacturing side in 2H10.” The PJ analysts closed by saying, “Several regional manufacturing indexes have pointed to some moderation in growth recently, most notably the Philadelphia Federal Reserve's index of regional manufacturing dropped to 8 from 21.4 in May. Although the index continued to show expansion, the June numbers suggest a much slower pace which seems to run parallel with the checks we conducted in the region.”