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On Wednesday, BRP (NASDAQ:DOOO) Inc. (DOO:CN) (NASDAQ: DOOO), a prominent player in the powersport industry, experienced a shift in stock rating as Stifel Canada revised its stance on the company. Previously rated as a Buy, BRP Inc . has now been downgraded to Hold. In conjunction with this change, the firm has also adjusted BRP's price target, bringing it down to Cdn$97.00 from the earlier Cdn$106.00.
The downgrade comes in the wake of the annual Club BRP 2025 event, a crucial occasion where BRP showcases its upcoming product lineup to dealers and engages in business discussions.
This year's event saw the introduction of several new products, including electric motorcycles, which signify BRP's entry into a new market segment.
Additionally, BRP unveiled new side-by-side vehicles (SSVs), all-terrain vehicles (ATVs), personal watercrafts (PWCs), and three-wheeled vehicles (3WWs), marking one of the company's most significant product launches in recent years.
These innovations are expected to bolster BRP's ability to capture more market share. However, insights gathered from discussions with dealers at the event painted a picture of caution. The prevailing sentiment suggested that consumer demand remains lukewarm, leading to low dealership traffic and elevated inventory levels.
These factors indicate that the industry's recovery might be more protracted than previously anticipated, potentially necessitating downward revisions in consensus estimates for the fiscal year 2026.
The analyst from Stifel Canada rationalized the rating and price target adjustments, citing the potential for further share weakness as a contributing factor.
The company's foray into electric motorcycles and the expansion of its product range are seen as positive steps, but the tepid consumer demand and high inventory levels pose challenges that could delay the industry's rebound.
InvestingPro Insights
In light of Stifel Canada's recent downgrade of BRP Inc. (DOOO), investors might find the latest metrics from InvestingPro valuable in assessing the company's stock performance and future prospects. BRP Inc. is currently trading at a price-to-earnings (P/E) ratio of 12.31, which is adjusted to 9.95 when considering the last twelve months as of Q1 2025. This indicates a relatively modest valuation compared to the industry average. Despite a decrease in revenue growth of -6.42% over the last twelve months as of Q1 2025, BRP has managed to maintain a gross profit margin of 24.65%, showcasing the company's ability to sustain profitability.
InvestingPro Tips highlight that BRP Inc. has been actively returning value to shareholders, as evidenced by its consistent dividend payments over the past 8 years and a dividend growth of 14.8% in the same period. Additionally, the company's management has been aggressively buying back shares, which could signal confidence in the company's future performance. While analysts have revised their earnings downwards for the upcoming period and anticipate a sales decline in the current year, BRP remains profitable over the last twelve months and is expected to stay profitable this year.
For investors seeking more in-depth analysis, there are over 10 additional InvestingPro Tips available at InvestingPro (https://www.investing.com/pro/DOOO), offering further insights into BRP Inc.'s financial health and market position. These tips can guide investors in making informed decisions, especially in the context of the industry's current challenges and BRP's strategic moves.
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