BRP Inc. (DOO:CN) (NASDAQ: DOOO) received an Outperform rating from BMO Capital Markets on Monday, with a stock price target of Cdn$115.00. Despite meeting expectations in the first quarter of fiscal year 2025, BRP revised its guidance for the second quarter and full year due to a cautious dealer network and a slowdown in retail demand for Seasonal Products and Marine.
The decision to lower forecasts is strategic, aimed at reducing inventory levels in preparation for fiscal year 2026. BMO Capital Markets believes that despite falling below market expectations, BRP’s market share gains in the Off-Road Vehicle (ORV) segment and projected earnings per share (EPS) in the $9.00 range for FY26 provide strong support for the stock in an unpredictable fiscal year 2025.
The analyst noted BRP’s proactive measures in adjusting channel inventory to position the company favorably for the upcoming year. While the guidance cut may raise concerns, it is viewed as a necessary step for BRP to navigate current challenges and emerge stronger in the future.
Despite near-term challenges, the analyst’s reiteration of the Outperform rating reflects confidence in BRP’s fundamental strength and market share capture potential. The unchanged stock price target of Cdn$115.00 suggests that the firm expects the company’s stock to perform well over time.
In conclusion, BMO Capital Markets sees BRP’s inventory management and FY26 expectations as positive steps. The Outperform rating and price target indicate belief in the company’s resilience and growth potential.
InvestingPro Insights
InvestingPro data shows that BRP Inc. maintains a strong balance sheet despite recent market challenges. With a market capitalization of $4.73 billion and a trailing Price/Earnings (P/E) ratio of 9.03, BRP is reasonably valued in the market.
BRP has consistently paid dividends for 8 years, with a dividend growth of 28.11% over the past twelve months as of Q4 2024, demonstrating its commitment to shareholder returns.
InvestingPro highlights BRP’s aggressive share repurchase program, indicating management’s confidence in the company’s value. The Relative Strength Index (RSI) suggests the stock is oversold, potentially attractive to value-oriented investors.
Despite a recent price decline, with a 1-week total return of -6.51%, InvestingPro’s Fair Value estimate for BRP is $84.09, indicating potential upside for investors amidst volatility. Access additional tips on BRP Inc. with the promotional code PRONEWS24 for a 10% discount on a yearly or biyearly Pro subscription.
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