Analyst raises earnings estimates for Brunswick

NEW YORK – After meeting with Brunswick Corp. CEO Dusty McCoy, Merrill Lynch analyst Hakan Ipekci seems confident in his leadership abilities.

“While some of the components of the new design and manufacturing processes, which aim to improve product quality and reliability as well as operating margins, are in place, it seems that there is still a fair amount of work to be done to enhance the products, manufacturing and distribution,” wrote Ipekci in a recent report. “We believe Mr. McCoy’s 5-year experience as the head of the Brunswick Boat Group, now the company’s largest segment, will be an important asset in this process.”

The analyst also said that the company expects Brunswick to look for new growth opportunities in Europe, Asia and South America for new growth opportunities.

“While expanding in new markets will likely be challenging, we find Brunswick’s recent strong performance in EMEA (Europe/Middle East/Africa), where sales have grown at a CAGR of 21 percent since 2000, and achievements in the U.S. promising,” he stated.

Merrill Lynch is also encouraged by “management’s continued focus on margins and return on capital as well as capital allocation discipline,” according to the report.

As a result, the company is raising its 2006 EPS estimate from $3.80 to $3.90 and establishing a 2007 EPS estimate of $4.40.

Merrill Lynch reported that it is maintaining its Neutral rating due to the uncertainty around the health of the U.S. consumer.

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