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On Thursday, BMO Capital Markets adjusted its outlook on BRP Inc . (TSX:DOO:CN) (NASDAQ: DOOO), reducing the price target from Cdn$100.00 to Cdn$70.00, while continuing to endorse the stock with an Outperform rating. The adjustment came after BRP (NASDAQ:DOOO) announced the deferral of its FY2026 guidance due to the ongoing uncertainties around tariffs and consumer demand. Despite the unexpected deferral, BRP’s stock experienced a notable increase, closing the day up by 7%. According to InvestingPro data, the stock has seen significant volatility, trading near its 52-week low of $35.54, with a year-to-date decline of approximately 25%.
The company’s financial results for the fourth fiscal quarter of 2025 were slightly ahead of market expectations, which provided some upward momentum for the stock. This positive performance was attributed to several factors, including what analysts perceive to be a lower-than-anticipated impact from tariffs, which remains subject to change. Additionally, the company’s normalized earnings per share (EPS) guideposts for FY2026 met the expectations of investors, which also contributed to the positive response in the stock market. InvestingPro analysis reveals that management has been actively buying back shares, and the company has maintained dividend payments for nine consecutive years, demonstrating confidence in its financial position despite market challenges.
The deferral of the FY2026 guidance by BRP was a significant move that caught investors off guard. The company is preparing for potential challenges ahead, with tariffs and consumer demand posing as unpredictable variables in the current economic landscape. This cautious approach reflects the broader industry’s sentiment as companies navigate through uncertain times.
In light of these developments, BMO Capital has revised its estimates for BRP, leading to the reduction in the price target. Despite this change, the firm remains optimistic about BRP’s ability to outperform in the future. The analyst’s comments suggest confidence in BRP’s potential to excel once the industry returns to a more normalized state.
Investors reacted positively to the news, with BRP’s stock showing resilience in the face of the deferred guidance. The company’s stock movement on the day highlighted the market’s ability to digest and respond to new information, balancing the immediate concerns with longer-term expectations for performance. InvestingPro Fair Value analysis suggests BRP is currently undervalued, presenting a potential opportunity for investors. For deeper insights into BRP’s valuation and 12 additional ProTips, including detailed financial health scores and comprehensive analysis, check out the full Pro Research Report available on InvestingPro.
In other recent news, BRP Inc. reported fourth-quarter earnings that surpassed analyst expectations, despite a year-over-year decline. The company’s normalized earnings per share (EPS) stood at C$0.98, exceeding Raymond (NSE:RYMD) James’s estimate of C$0.79 and the consensus of C$0.82. Additionally, BRP’s normalized earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter was C$240 million, surpassing both Raymond James’s projection and the market consensus. Raymond James maintains a Strong Buy rating for BRP, although the firm recently reduced its price target from Cdn$98.00 to Cdn$65.00, citing retail headwinds and tariff concerns.
Meanwhile, Citi downgraded BRP’s stock from Buy to Neutral, adjusting the price target to Cdn$70.00 from Cdn$90.00, due to concerns about potential tariffs affecting profitability. The Citi report highlights the risks associated with BRP’s exposure to tariffs, particularly in relation to China and Mexico, which could significantly impact the company’s financial performance. Despite these challenges, Raymond James continues to view BRP’s valuation as attractive, based on its earnings power and growth opportunities in the off-road vehicle and three-wheeled vehicle markets. BRP has deferred providing guidance due to uncertainties surrounding tariffs, reflecting its cautious approach in the current economic climate.
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