On Thursday, JPMorgan made an adjustment to Brunswick Corp 's (NYSE:BC) financial outlook, reducing the price target to $70 from the previous $74 while keeping a Neutral stance on the stock. The decision follows Brunswick's third-quarter financial performance, which did not meet market expectations. Brunswick reported an adjusted earnings per share (EPS) of $1.17, falling short of the consensus estimate of $1.19. The company's revenues saw a year-over-year decrease of 20.1%, which was more significant than the anticipated 19.4% decline.
The contraction in operating margin was another concern, dropping by 455 basis points year-over-year to 9.9%, which was below the expected 10.0%. Brunswick's various business segments experienced varying levels of revenue decline. The Propulsion segment's revenue fell by 32% year-over-year, which was slightly better than the forecasted 33% drop. Boat revenue decreased by 19% year-over-year, aligning with market predictions. However, Navico Group's revenue went down by 14%, compared to the expected 10%, and Engine Parts & Accessories (P&A) revenue saw a 3% year-over-year decline, against the anticipated 1%.
The company's management provided commentary that echoed the findings of JPMorgan's fieldwork. They noted that dealer sentiment remains negative, with continued cautiousness and low re-order levels after the core retail selling season. Additionally, Original Equipment Manufacturer (OEM) customers are reportedly cutting back on production in response to weaker dealer orders and consumer demand, impacting the Propulsion and Navico Group segments in particular.
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