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On Monday, Citi analysts adjusted their outlook on Brunswick Corp (NYSE: NYSE:BC), a leading marine manufacturer with a market capitalization of $4.5 billion, reducing the price target to $85 from the previous $95 while maintaining a Buy rating on the stock. According to InvestingPro data, the stock is currently trading near Fair Value levels, with analyst targets ranging from $60 to $100. The revision follows a notably weak performance in December and concerns over high inventory levels reported by MarineMax, the largest customer of Brunswick's Boat Group.
The analysts cited the challenging month and inventory issues as factors that could force Brunswick to ship fewer products to distributors in the early part of 2025. They stated, "Based on a particularly weak month of December as well as elevated inventories reported by MarineMax, we can’t help but think that BC will need to under-ship the channel (whether they like it or not) for the early portion of 2025."
The price target adjustment was accompanied by a reduction in earnings estimates. Citi's decision to set the new target at $85 reflects a historical 14 times multiple on the firm's 2026 earnings estimate. The analysts added, "Commensurate with our estimate reductions, we are lowering our price target from $92 to $85."
Despite the reduction in the price target and the anticipated shipping adjustments, Citi reaffirms their confidence in Brunswick with a continued Buy rating. This suggests that the firm believes the stock still has potential for growth and that the current issues may be temporary setbacks.
Investors and market watchers will likely monitor Brunswick's performance closely in the coming months to see how the company navigates the reported challenges and if it aligns with Citi's expectations. Brunswick Corp has not publicly responded to Citi's revised price target and maintained rating at the time of reporting.
In other recent news, Brunswick Corporation reported a 20% year-over-year decline in net sales for Q3 2024, with an adjusted earnings per share (EPS) of $1.17. The company also anticipates a 10% year-over-year decline in new boat retail unit sales for the full year, and has executed $190 million in share repurchases year-to-date. Notably, the propulsion segment experienced a 32% sales drop.
Brunswick has also revised its credit facility and commercial paper program to $1 billion each, an effort to boost capital flexibility. For Q4, the company expects net sales to range between $5.1 to $5.2 billion and an adjusted EPS of approximately $4.50.
B.Riley recently adjusted its rating on Brunswick from Buy to Neutral, setting a new price target at $88.00, down from the previous $95.00. The firm expressed caution regarding the timing of a demand rebound for Brunswick's products, and suggested that consensus estimates for the year 2025 might need to be adjusted downwards. Despite the current market conditions, these recent developments underline Brunswick's ongoing commitment to innovation and market leadership.
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