Quick Recovery For FAST

Analyst Thomas L Hayes of Piper Jaffray reiterates his “overweight” rating on Fastenal Company (NASDAQ: FAST). The target price for FAST is set to $54.

Fastenal is poised for robust growth over the next couple of years, the analyst believes. FAST is Piper Jaffray’s “favorite large-cap name.” Although the company suffered unexpected gross margin contraction in 4Q, this was not on account of any weakness in business conditions. Thus, margins should expand sequentially throughout this year.

With manufacturing stabilizing, Fastenal’s 1H10 performance is likely to be driven by expense leverage. This will result in margin growth in 2H10 when FAST returns to top-line growth, boosted by its store opening program, the analyst explains.

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