DENVER – RBC Capital Markets analyst Ed Aaron believes that boat retail chain MarineMax is being conservative in its earnings guidance for this year and 2007 – that is, if market conditions don’t worsen.
For that reason, RBC is maintaining its outperform with above average risk rating of the company’s stock.
That admitted risk comes down to whether boating industry sales stay at their current rate or continue to slow down.
“While we concede that further downside risk may exist, and that shares may not meaningfully recover until investors anticipate a directional improvement in the cycle, we believe investors have appropriately discounted the recent industry slowdown,” commented Aaron in a recent statement.
In its recent second quarter earnings statement, MarineMax reiterated its full-year guidance for comps and narrowed its EPS guidance to the high end ($2.08-$2.13 vs. prior guidance of $2.05-$2.13). Management also provided initial 2007 guidance of $2.15-$2.25.
“Assuming market conditions remain at current levels, we believe these expectations are set at a conservative level,” said Aaron. “We are maintaining our full year 2006/2007 EPS estimates of $2.13/$2.25. Additionally, we have lowered our price target to $28.”
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