Analyst sees silver lining for Brunswick
NEW YORK – While he expects further weakening in the marine market, Merrill Lynch analyst Hakan Ipekci believes there is a silver lining to this stormy forecast for Brunswick Corp.
Ipekci expects the market weakness will give Brunswick’s executives an opportunity to focus on strategic initiatives, “which should reduce operating expenses by $180 to $200 million over the next five years.”
“While their impact on near-term results is likely to be limited, we expect the company to experience even stronger operating leverage than before, when top-line trends turn positive,” he wrote in a statement yesterday.
In the meantime, however, Merrill Lynch expects Brunswick to experience further production cuts due to continued marine market weakening, especially in the entry-level segment. And Brunswick’s stock will likely be “range-bound” between $25 and $35 over the next three to six months as a result of an “uncertain consumer environment and softening housing market,” Ipekci added.
Therefore, the financial firm is reducing its 2006 and 2007 EPS estimates from $3.05 and $3.50 to $2.45 and $2.00, respectively.
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