Should you sell your BRP stock?

Scotia Capital analyst Jonathan Goldman says BRP’s (BRP Stock Quote, Chart, News, Analysts, Financials TSX:DOO) restored guidance and improved tariff visibility are positives, but he still sees the stock as fairly valued after the company’s first-quarter results.

As reported by the Globe and Mail, Goldman maintained his “sector perform” rating on BRP and raised his target to $83.00 from $80.00.  The average target is $95.28.

“Certainly the restoration of guidance (the company must have some semblance of visibility) and more clarity around tariff impact is worth a premium vs. yesterday,” Goldman said in his May 29 note. “But, the highest the shares have ever traded since the 2013 IPO was 20.4 times P/E. Applying that multiple to our calendar 2026 and 2027 estimates — which we view as some variation of trough earnings — implies a share price of $83.”

BRP reported first-quarter revenue of $2.39-billion for the period ended April 30, up 29.5% year-over-year and above expectations, driven by higher off-road vehicle and personal watercraft shipments and a favourable ORV product mix. Normalized EBITDA was $334.4-million, up 66.5%, while normalized diluted EPS was $1.83.

The company also restored full-year guidance after withdrawing its forecast in mid-April because of U.S. tariff changes. BRP now expects fiscal 2027 revenue of $9.1-billion to $9.4-billion and normalized diluted EPS of $3.00 to $3.50.

“We delivered Q1 financial results above expectations, driven by higher volumes, disciplined cost management, strong overall execution and a more favourable promotional environment,” BRP CEO Denis Le Vot said in the company’s results announcement.

Goldman said BRP’s revised outlook incorporates tariff mitigation measures, including modest price increases, supply chain optimization and overhead reductions.

“It’s kind of remarkable that a company as large as BRP can find an extra $200-million of EBITDA in the span of six weeks,” he said. “We don’t want to imply that it was easy: instead, we view the nominal price increases (less than low single digits) as a testament to DOO’s strong product line-up and brand.”

Goldman said his estimates increased on the back of the Q1 beat and stronger industry fundamentals, including better-than-expected ORV trends, above-target snowmobile spring pre-orders, stronger parts, accessories and apparel orders, a more favourable promotional environment and improved product mix.

He also pointed to strong share gains in side-by-side vehicles and ATVs, each up more than three percentage points in current units.

“We believe earnings power is 15% to 20% higher than current run-rate,” Goldman said.

While Goldman said BRP’s free cash flow outlook should support buybacks, he said the shares appear “at best fairly valued,” with leverage improving to 2.8 times from 3.0 times and likely to renew investor discussion around a potential re-acceleration of M&A.

-30-