RBC Capital analysts provided their views on W.W. Grainger, Inc. (NYSE:GWW) following the company’s Investor Day, where it reaffirmed 2022 guidance and set ambitious 2025 targets.
Demand in Q3 remains resilient, as the company disclosed sales through mid-Sept were up 17%, and up 20% ex-FX. The company reaffirmed its 2022 guidance including sales of $15.0-$15.2 billion, gross margin of 37.2%-37.5%, and adjusted EPS of $27.25-$28.75. The company also set 2025 targets, including sales of $19-$20 billion, with a 37% gross margin, and adjusted EPS of $40.
Additionally, the company increased its outgrowth target in HTS US from 300-400 bps to 400-500 bps, mostly driven by expectations to improve its merchandising/marketing and seller coverage/effectiveness. However, as the supply chain normalizes, the analysts believe this outgrowth target could be at risk.