Wells Fargo Securities upgraded its outlook on Brunswick to "outperform" following the company's third-quarter earnings report released last week.
Though Brunswick reported a 36 percent drop in overall sales for the quarter, including a 40 percent decline in marine sales, it also reported the reduction of inventory levels to 21 weeks of supply in the pipeline, an improved cash position up by more than $300 million from the 2008 year-end balance, and a reduction in debt.
"Brunswick is well-positioned as the leading global low-cost manufacturer of recreational marine products with a diverse geographic sales base," said senior analyst Tim Conder in his report. "Investors are yet to fully appreciate [Brunswick's] 1) mitigated risk of further production cuts, 2) lower operating cost structure for enhanced profitability at materially lower production levels, 3) position to gain share throughout marine cycles, and 4) potential peak cyclical [earnings per share] of $1.70 to $3.50."
The range of potential peak cycle earnings per share reflects the base-case and best-case scenarios for demand recovery through 2014, Conder noted.
In early morning trading today, Bruswick stock was trading at $10.55 per share, up from its close Friday of $9.48 per share. Its 52-week high and low are $13.43 and $1.82.