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Analysts detail why they're bullish on Brunswick

Following a meeting between Brunswick officials and RBC Capital Markets, analysts said discussions with the boatbuilder support its "positive view of [Brunswick] shares."

"While still too early to call this year's selling season, the cycle is on the cusp of turning and Brunswick's competitive advantages (e.g., low-cost production, better distribution, superior product development capabilities) should enable the company to benefit disproportionately as industry conditions improve," RBC Capital Markets said.

During discussions, CEO Dusty McCoy reiterated his view that 2010 likely will mark the bottom of the cycle.

"While boat show sales often have limited predictive value, management is encouraged by the quality of discussions between dealers and consumers and a seemingly rational competitive environment," the RBC report said. "Near term, management seems more positive on smaller boat segments. While buyers in bigger boat segments have the desire to trade up, many are still under water on their existing boats.

"This should change as wealth accumulates, but it will likely take time for the larger boat segments to turn."

Brunswick is ramping production to meet strengthening dealer demand and is encouraged by manufacturing productivity, according to RBC.

"Management is working to better leverage its competitive advantages, especially in engines, to grow faster than the market as the recovery unfolds," according to the report.

This involves two primary areas of focus:

  • Accelerating innovation while maintaining or reducing the cost of the product. "Boston Whaler is already reaping the benefits of strong progress in this area. Other brands, especially in the sterndrive/inboard area, need to follow Whaler's lead."
  • Capitalizing on international growth opportunities.

Brunswick stock opened  at $22.77 a share this morning. Its 52-week high and low are $24.67 and $11.72.

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