Analysts upbeat on Brunswick despite challenges

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Despite the fact that Brunswick Corp. analysts have been all over the map in their predictions for the company, experts see smooth sailing ahead.

That’s according to Medill Reports Chicago, which says the analyst opinions have been as volatile as the marine industry itself.

Of 10 analysts surveyed by Bloomberg, six rate the stock a buy, three say hold and only one analyst says sell. In April, just before Brunswick released its first-quarter earnings report, Longbow Research downgraded the stock to neutral, but Longbow has since upgraded the stock to a buy and set a price target of $40. In recent months, other firms have announced conflicting changes.

The stock is vulnerable to effects from weather and the economy, as discretionary spending on boats is not as heavy during tough times. Boats as a discretionary purchase, combined with consumer “wealth rebuilding,” contributes to a slow, elongated recovery for the domestic marine industry, Tim Conder of Wells Fargo said in a report.

Brunswick reported first-quarter earnings on April 25 and they beat Wall Street expectations with a modest improvement in gross level margins. The company reported net earnings of $49.8 million, or 53 cents a diluted share, compared with a year-earlier profit of $39.7 million, or 43 cents a diluted share. First-quarter sales rose 3.7 percent, to $995.3 million, from $959.6 million in the year-earlier quarter.

James Hardiman, senior equity analyst at Longbow Research, inquired during the first-quarter earnings call, “We see a pretty big first-quarter beat and yet, excluding taxes, the guidance is largely unchanged.”

CEO Dustin McCoy said the company's caution stemmed from uncertainty about the marine business retail season, which was delayed by colder-than-usual conditions in the first quarter. The company now has “room to take a turn here through the second quarter and begin to get a good view about what’s going to go on at retail," McCoy said.

Click here for the full Medill analysis.

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