UPDATE: Stifel Initiates Coverage on MSC Industrial Direct Co. with Hold Rating Ahead of Expected Transition Year

In a report published Friday, Stifel analyst Robert McCarthy initiated coverage on

with a Hold rating. In the report, Stifel noted, “We are initiating coverage of MSC Industrial Direct Co., Inc. (MSM) with a Hold rating on the shares and assigning a fair value estimate of $88, which is based on 18.5x FY16E EPS of $4.75 and indicates 11% upside potential. With $2.8 billion in FY14 sales, MSC Industrial is one of the largest direct marketers and premier U.S. distributors of metalworking and maintenance, repair, and operations (MRO) supplies to industrial customers. We think MSC is a well-run industrial distributor with a dynamic management team that has been making bold investments in industrial distribution, especially through its metalworking acquisitions. We believe FY15 will likely be a transitional year for the company, as a soft pricing environment should lead to limited margin upside.” MSC Industrial Direct Co. closed on Thursday at $79.27.