On Monday, Citi adjusted its outlook on BRP Inc . (NASDAQ: NASDAQ:DOOO) shares, reducing the price target to $73 from the previous $79 while keeping a Buy rating on the stock.
The firm's decision reflects a conservative stance due to a variety of factors that could influence the company's performance in the upcoming year.
The analyst from Citi noted that the new price target is set at a 10x multiple of the firm's fiscal year 2026 earnings per share estimate, which is significantly lower than the historical average of approximately 15x.
This conservative multiple is a result of the potential impact from a wide array of macroeconomic, industry, and company-specific influences, as well as the volatility seen in the company's guidance.
Despite the lower price target, Citi remains optimistic about BRP's future. The firm suggests that if the events of the next year align with their expectations, there is a possibility for arguing a return to a more normalized earnings multiple. Such a shift could indicate a greater upside for the company's shares.
Citi's maintained Buy rating indicates that, despite the reduced price target and the cautious multiple, they believe BRP's stock still holds potential for investors.
The analyst emphasized the conservative nature of the target multiple, hinting at the possibility of revisiting it should the company's outlook improve over the next year.
All financial figures referenced by the analyst in the report are presented in Canadian dollars, as per Citi's analysis. This price target adjustment by Citi comes as they take into account the various uncertainties that could shape BRP's financial trajectory in the near term.
InvestingPro Insights
In light of Citi's recent outlook adjustment for BRP Inc. (NASDAQ: DOOO), current data from InvestingPro provides additional context that may interest investors. With a Market Cap of approximately $4.66 billion USD and a P/E Ratio of 8.66, BRP Inc. appears to be trading at a valuation that could attract value-oriented investors. A notable InvestingPro Tip is that management has been aggressively buying back shares, which could signal confidence in the company's value proposition. Additionally, BRP Inc. has raised its dividend for 3 consecutive years, with a current Dividend Yield of 0.99%, which may appeal to income-focused shareholders.
Despite recent price volatility, with a 1 Week Price Total Return of -6.51% and a 1 Year Price Total Return of -14.29%, the company has maintained dividend payments for 8 consecutive years, demonstrating a commitment to returning value to shareholders. The stock's Price / Book ratio stands at 7.87, a metric that suggests the stock is trading at a premium relative to its book value. For investors seeking further insights, there are additional InvestingPro Tips available, which offer a deeper dive into the company's financial health and future prospects.
For those considering an investment in BRP Inc., using the coupon code PRONEWS24 provides an additional 10% off a yearly or biyearly Pro and Pro+ subscription to InvestingPro, where investors can access a full suite of tools and tips to inform their investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.