Analyst: Dealers remain cautious on inventory

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Inventory levels have improved since last year and "dealers remain healthy, but conservative with their inventory positions," according to a report from Tim Conder, senior analyst at Wells Fargo Securities.

The report follows a conference call Wells Fargo had with a leading marine industry lender that was not identified.

“Based on commentary, channel inventory levels appear significantly improved [year over year] with [greater than] 18-month aged inventory at 13 percent of overall inventory versus 40 percent a year ago,” Conder wrote. “Used channel inventory [is] in very short supply. Retail financing terms appear rational with cash sales potentially increasing [year over year].

“May [year-to-date] U.S. new unit retail sales appear down 3 percent [year over year],” he added.

Brunswick, he said, is gaining engine share, and boat share gains have been led by aluminum and ski products. Brands such as Bayliner and Sea Ray are “lagging in [Brunswick’s] portfolio due to weaker overall industry segments. However, this is generally typical at this point in the cycle,” Conder added.

“Bottom Line: Investor concerns regarding flat U.S. new unit retail boat market appear to be more than fully discounted in [Brunswick] shares,” he wrote. “We would continue building positions at current levels.”

Brunswick stock closed Tuesday at $18.05 a share. Its 52-week high and low are $27.70 and $11.72.

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