Brunswick Gets Price Target Cut at RBC

Marine company Brunswick (BC) had its rating and price target cut by RBC Capital Markets on Monday as the maker of boats and engines faced pressure from weather issues in the second quarter.

Shares in Brunswick will be “range-bound” until the 2020 boat season gets closer, RBC analyst Joseph Spak said in a note. The weather issues are out of Brunswick’s control, but it will force the company to pull back on shipments to allow dealers to de-stock, which is the “right move,” he said.

Brunswick’s shares were down 1.2% in early afternoon trading, and have retreated 32% over the past year. The rating was lowered to sector perform from outperform, while the price target on the shares was cut to $47 from $55.

“Mid-to-long term, we still like BC’s positioning,” Spak said. “However, we step to sidelines as shares enter seasonally weak time period anyway.”

Last week, Brunswick said it completed the divestiture of its fitness business to private investment firm KPS Capital Partners in a $490 million deal. The firm also initiated measures to bring in $17 million in cost reductions including eliminating more than 100 positions and consolidation of two office facilities in the Chicago area. It will take $6 million in restructuring charges for 2019.

The sale of the fitness business makes Brunswick a “pure-play marine investment vehicle with an industry-leading portfolio of innovative assets and services,” Spak said. The proceeds from the sale provide “significant funds” for stock buybacks, debt payments and possible accretive merger and acquisition deals, according to RBC.

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