BRP stock price target cut by analyst following Q3 results

Published 09/12/2024, 22:44
BRP stock price target cut by analyst following Q3 results

On Monday, BRP Inc . (TSX:DOO) (NASDAQ:DOOO) experienced a revision in its stock outlook, as DA Davidson adjusted the price target to $88 from the previous $96, while still endorsing the stock with a Buy rating.

The adjustment follows BRP (NASDAQ:DOOO)'s strong performance in the third quarter of fiscal year 2025, where it surpassed earnings expectations and uplifted its full-year guidance for FY25. This positive shift comes in the wake of the company's decision to withdraw from its less lucrative Marine business.

BRP's upward trajectory in the market has been supported by its strategic moves to streamline inventory levels. The company is currently in a phase of inventory rationalization and has made commendable strides towards achieving its target of reducing field inventories by 15%-20% by the end of FY25. This progress has been a contributing factor to the sustained Buy rating.

The rationale behind the revised price target is anchored in the company's prudent destocking efforts and the potential for increased profitability due to improved retail performance. DA Davidson's revised price target of $88 is predicated on a price-to-earnings (P/E) multiple of 16.0 times the forecasted FY26 earnings per share (EPS) of $5.50. This projection represents a decrease of $0.50 from the consensus estimate of $4.95.

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