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Thursday - Citi analysts have downgraded BRP Inc . (TSX:DOO) (NASDAQ:DOOO) stock rating from Neutral to Sell, significantly reducing the price target to $29.00 from the previous $48.00. The downgrade comes amid concerns regarding a challenging market environment and the impact of additional tariffs. According to InvestingPro data, industry peer Polaris (PII) reflects these challenges, with its stock down over 52% in the past year and currently trading near its 52-week low of $39.79.
BRP Inc. , along with its industry peer PII, is facing a tough market that is becoming increasingly promotional. According to Citi, both companies are also confronting significant challenges due to new tariffs imposed by China, as well as potential tariffs from Mexico and Canada. The situation is described as potentially untenable, especially if 25% tariffs on Mexican and Canadian imports were to be implemented indefinitely, which, while unlikely, remains a distinct possibility. PII’s recent performance confirms these headwinds, with revenue declining 19.32% over the last twelve months, though the company maintains a robust 6.3% dividend yield. Get deeper insights into both companies with InvestingPro’s comprehensive research reports, available for over 1,400 US stocks.
Citi’s analysis suggests that such tariffs could lead to immediate substantial losses for both companies, which would adversely affect their long-term viability. The analyst indicated that even without the worst-case tariff scenario, the combination of a weakening market and the added Chinese tariffs is sufficient to impact the companies’ valuations negatively.
The revised price target of $29.00 reflects a significant decrease from the prior target of $48.00. This adjustment is a direct response to the anticipated difficulties stemming from the external economic pressures highlighted by the analyst.
The report from Citi underscores the potential risks that BRP Inc. faces in the current economic climate. The company, known for its recreational vehicles, including snowmobiles and watercraft, must navigate through these market headwinds and tariff-related challenges as it moves forward.
In other recent news, Polaris Inc. has faced several significant developments affecting its financial standing and credit ratings. S&P Global Ratings downgraded Polaris Parent LLC’s credit rating to ’CCC+’ due to expected negative cash flow and slower revenue growth, despite improvements in EBITDA margins. Moody’s also downgraded Polaris Newco, LLC’s ratings to Caa1, citing high leverage and weak liquidity, with expectations of negative free cash flow continuing. Meanwhile, Polaris Inc.’s credit outlook has been revised to negative by S&P due to weakened credit metrics, with anticipated underperformance in revenue and EBITDA for 2025.
The company’s exposure to tariffs and challenging macroeconomic conditions were highlighted during its Capital Markets Day, as noted by RBC Capital and BMO Capital Markets. Both firms maintained their respective ratings of Sector Perform and Market Perform on Polaris Industries (NYSE:PII), reflecting a cautious stance due to the operational headwinds. Polaris is expected to continue facing obstacles from tariffs and macroeconomic pressures, influencing consumer behavior in the short term. Despite these challenges, Polaris has reiterated its long-term financial goals and commitment to product development and efficiency gains.
The company’s strategic initiatives aim to mitigate near-term difficulties while setting the stage for future growth. However, the ongoing uncertainty around tariffs and their impact on the industry remains a concern for stakeholders. As Polaris navigates these complexities, investors are closely monitoring the company’s ability to maintain its financial projections and market position amid the challenging landscape.
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