Analyst upgrades Brunswick stock

Author:
Updated:
Original:

RBC Capital Markets is upgrading Brunswick Corp. stock from sector perform to outperform.

"With liquidity risks now behind it and dealer inventories coming in line, we view [Brunswick] as a compelling three-year earnings recovery story," analyst Edward Aaron wrote in his report. "Our call requires only a 20 percent demand recovery over the next three years following peak-to-trough decline of nearly 60 percent since 2005."

"In the interim, we believe the rate of improvement in profitability and inventory metrics beginning in 2010 will provide reason for optimism, even if demand is slow to recover," he added.

At midmorning, Brunswick was trading at $10.22 per share, up from its opening of $10.03 per share. Brunswick's 52-week high and low are $14.10 and $1.82.

Aaron said that while economic conditions remain challenging, RBC recently surveyed nearly 150 dealers and, though tight credit continues to take its toll, industry demand appears to be stabilizing. Feedback suggests sales are tracking down 20 to 30 percent.

Meanwhile, inventory levels are in much better shape, especially for Brunswick dealers.

"With flat demand, we estimate that Brunswick's boat segment revenue will grow 65 percent and 35 percent, respectively, over the next two years," Aaron said.

The dealer survey shows that overall business conditions remain "brutal," and concerns over competitor discounting and tight credit have increased from last year, though concerns over housing and gas prices have decreased from 2008.

Nearly 70 percent of those surveyed said they were "very concerned" about floorplan financing and reported margins significantly down.

Click here for the full report and dealer survey.

Related

A Collective Voice Against Tariffs

Organizations in the E.U. and U.S. have issued a statement ahead of next week’s Brussels Summit urging for the termination of retaliatory tariffs.

ABYC Free Webinar Series Returns

The association’s online learning events will continue with “Fuel System Troubleshooting” on June 17.

Getting to Know the Newbies

At last week’s Partners Outdoors symposium, RBFF’s Stephanie Vatalaro shared information that can help the marine industry get to know its new audiences.

Switching to Compostable Bags

Foul-weather gear maker Grundéns will start using eco-packaging that you can cut up and use in the garden.

Brunswick Corp. CEO to Headline Innovation Summit

David Foulkes will speak on implementation at the Sept. 9 summit, organized by Correct Craft.

Navico Hires Americas PR Manager

Navico brings its public-relations duties in-house with the hiring of Kim Rodriquez.

Galeon Expands Dealer Network

The builder looks to British Columbia-based dealer Freedom Marine to grow the brand in western Canada.

No Inventory? Now Is Not The Time to Stop Marketing

The MRAA’s Webinar “Marketing When You Have No Inventory” covered how dealers can build long-term equity with new and returning customers as demand outpaces supply.