Should you sell your BRP stock?

TD Cowen analyst Brian Morrison downgraded BRP  (BRP Stock Quote, Chart, News, Analysts, Financials TSX:DOO) to “Hold” from “Buy” and cut his target price to $84.00 from $119.00 after the company suspended its fiscal 2027 outlook, saying amended U.S. Section 232 tariffs on steel, aluminum and copper create a major new earnings headwind.

As reported by The Globe and Mail, in an April 15 note, Morrison said BRP is more exposed than peers because much of its off-road vehicle and snowmobile production for the U.S. market comes from Mexico and Canada. He said the latest U.S. tariff changes include a 25% levy on the full value of BRP snowmobiles sold into the U.S. and affect most of its off-road vehicle models as well.

“We believe available levers to BRP will not offset a large component of this impact, and that the next data point to gain visibility on this major headwind is within a USMCA renegotiation,” Morrison said. He said that while pricing and cost mitigation are possible, higher pricing could also hurt market share. On balance, he estimates the change could reduce BRP’s fiscal 2027 EBITDA by about $350-million.

Morrison said the size of the impact and the limited visibility on possible relief warranted lower forecasts and a reduced rating.

“The magnitude of the impact is material, and visibility to the amendment changing is limited,” he said, adding that the revised outlook could imply a $30 to $40 decline in the stock.

He said BRP remains an industry leader with a strong management team, a history of generating free cash flow through downturns, and an earnings base still supported by more normalized industry inventories. But he argued the tariff amendment now outweighs those positives in the near term. Morrison added that he would see value if the shares moved into the low-$70 range.

His new $84.00 target is now the lowest on the Street, versus a broader average of $115.99.

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