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On Wednesday, Raymond (NSE:RYMD) James analyst Joseph Altobello confirmed a Strong Buy rating and Cdn$98.00 price target for BRP Inc . (TSX:DOO:CN) (NASDAQ: DOOO), following the company’s fourth-quarter results. BRP (NASDAQ:DOOO), known for its recreational vehicles, reported earnings that surpassed analyst expectations despite a year-over-year decline. According to InvestingPro analysis, the stock appears significantly undervalued at its current price of $35.54, trading near its 52-week low.
BRP’s fourth-quarter normalized earnings per share (EPS) came in at C$0.98, which is a 65% decrease compared to the same period last year. However, this figure exceeded the Raymond James estimate of C$0.79 and the consensus of C$0.82. The reported EPS also landed at the higher end of the company’s guided range of C$0.54 to C$1.04. The stock has faced significant pressure, with InvestingPro data showing a 41% decline over the past six months.
The company’s normalized earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter was C$240 million, a 45% drop from the previous year. Despite the decline, the results were ahead of the Raymond James projection of C$236 million and the market consensus of C$237 million. The EBITDA figures aligned with the company’s guidance, which ranged from C$220 million to C$270 million. InvestingPro data reveals the company maintains a solid financial health score, with particularly strong profitability metrics. Subscribers can access 12 additional ProTips and comprehensive financial analysis in the Pro Research Report.
BRP’s results for the quarter ending in January were impacted by soft demand, which has been an ongoing challenge for the company. Nevertheless, the financial performance exceeded expectations, indicating resilience in the face of market headwinds.
The firm also noted BRP’s decision to defer providing guidance due to the uncertainty surrounding tariffs. This move reflects the company’s cautious stance in an unpredictable economic environment, especially regarding international trade and tariffs that could affect its operations and costs.
In other recent news, Citi analysts have downgraded BRP Inc. ’s stock from a Buy to a Neutral rating. This adjustment comes with a revised price target, now set at Cdn$70.00, down from the previous Cdn$90.00. The change in rating and target price reflects concerns over potential tariffs that could impact BRP’s profitability. Analysts at Citi have highlighted the risk of tariffs affecting powersports companies with significant exposure to China and Mexico, especially if implemented during a second Trump administration. The situation remains fluid, with BRP yet to take substantial actions to mitigate these potential impacts. The downgrade indicates that BRP now faces the challenge of proving its ability to navigate this uncertain landscape. Citi’s revised expectations suggest that the burden is on BRP to demonstrate resilience amid these potential tariff-related headwinds.
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