Boat Sales Surge in May - Analyst (HZO) (BC)

June 21, 2013 12:04 PM EDT Send to a Friend
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Boat stocks Brunswick Corp (NYSE: BC) and Marinemax Inc. (NYSE: HZO) are lower Friday, but information on May boat sales suggests the opposite should be the case.

SunTrust Robinson Humphrey analyst Michael Swartz noted that this morning Statistical Surveys showed powerboat sales jumped 7% year-over-year in May.

"In our view, this is a positive surprise given, what we believe, were low expectations for the month," Swartz said. The number comes despite a tough +24% comp from May 2012.

The analyst said the aluminum >16 ft and fiberglass >30 ft segments improved 14% and 8% YoY, respectively, but were partially offset by a 2% decline in the smaller (11-30 ft) fiberglass segments. "Notably, this was the third straight YoY increase for >30 ft fiberglass, giving us greater comfort that market has at least bottomed," the analyst said.

"While it appears that more normalized weather in May brought consumers off the sideline, the real question for 2013 is how much pent-up demand has been deferred until 2014," Swartz wrote. "With roughly 50% of the annual boat season to go, this could dictate the pace of the next few months. We also point out that comps ease from here."

While the boat season has been challenged to date - down 1% - the May data gives the analyst confidence that he recovery has not sputtered, as feared.

He has a Buy rating on both Brunswick Corp (NYSE: BC) ($42 PT) and Marinemax Inc. (NYSE: HZO) ($17 PT)

For an analyst ratings summary and ratings history on Brunswick Corp click here. For more ratings news on Brunswick Corp click here.

Shares of Brunswick Corp closed at $30.79 yesterday.

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