Analysts drop earnings estimate on Brunswick

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Analysts from Wachovia Capital Markets are reducing their earnings estimates for Brunswick Corp., following the company’s recent announcement to stop production on several of its boat brands.

Wachovia is reducing 2008 and 2009 estimates for Brunswick to 50 cents and $1.10 per share, respectively. The investment firm previously forecasted earnings per share of 90 cents for 2008 and $1.24 for 2009.

The change was made to reflect $29 million in restructuring charges already outlined in Brunswick’s first-quarter earnings report, plus another $25 to $30 million in restructuring charges related to the company’s termination of its Bluewater Marine brands — Sea Pro, Sea Boss, Palmetto and Laguna — in the second quarter. Wachovia also anticipates lower boat production in 2009 given the ongoing challenges of the marine market.

“Industry lending sources indicate dealer inventories remain heavy as we believe product greater than 12 months old is at four-year highs,” said Tim Conder, managing director of Wachovia’s leisure equity research, in his report. “Dealer and manufacturer promotions along with manufacturer production cuts appear to be accelerating to avoid further building of channel inventories approaching the end of the ’08 model year (June).”

“We believe Brunswick shares have seen their cycle lows, but continue to see shares in a $15-$18 range until evidence of a bottoming in U.S. marine conditions begins to emerge,” Conder added.

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