Analysts’ Corner: Backlash by independents to impact Brunswick’s future?

SAN FRANCISCO, Calif. – Following the recent release of Brunswick Corp.’s fourth quarter and year end earnings report, analyst Gary Cooper of Banc of America Securities LLC reports that while his company expects Brunswick to deliver upside to its fiscal year 2005 guidance, there are several factors that may mitigate the extent of its earnings per share (EPS) upside potential.

“Further upside to our estimate may be limited by 1) pricing pressure in the outboard market, 2) declining retail sales of Brunswick’s aluminum business, and 3) continued backlash by independent boat builders and dealers,” he wrote in a recent report.

Banc of America has reduced its FY05 EPS estimate by $0.15 to $3.35, which is $0.05 above the range of $3.15-3.30 provided by Brunswick. Cooper said Banc of America’s estimate is driven by revenue growth of nearly 13 percent, above guidance of 11-12 percent.

The firm has also reduced its target price from $52.50 to $50. The new price represents a 15x multiple of its FY05 estimate of $3.35 and a 12x multiple of its new FY06 EPS estimate of $4.10.

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