Monday, Credit Suisse upgraded W.W. Grainger, Inc. (GWW) shares to Outperform from Neutral and increased its price target to $112 from $85. The brokerage raised its 2010 EPS estimate to $5.90 from $5.68.
Analyst Mazari said that his upgrade reflects a more attractive risk/reward versus peers, combined with what he believes to be faster top-line growth than the market expects based on his proprietary distribution sales index model. Certain supply chain initiatives, product sku, and market expansion should also drive higher margins over the next couple of years.
The analyst raised estimate to account for his revised estimate of top-line growth combined with structural cost savings driven by better procurement and supply chain. The analyst's 2010 estimate is well above the $5.58 consensus forecast.
The brokerage believes third quarter earnings on October 14 would likely surprise to the upside combined with the annual analyst day on November 18, when Grainger would likely lay out its strategic plan. The analyst day will include 2010 guidance and long term margin targets, which the brokerage believes will come in higher than expectations. The brokerage thinks both the above events should lead to upward earnings revisions.
The analyst raised estimate based on his estimate of normalized EPS of $6.51 at an 18x P/E multiple. GWW is trading at over a 30% discount to its more cyclical industrial distribution peers, and a lot of that is an expectation that Grainger's sales growth will be much more muted than peers in an economic recovery. The analyst thinks it would not be as muted as many may think.
Currently, GWW is up $2.90 or 3.20% and trading at $93.64.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.