Stifel raises BRP Inc. stock rating to Buy, price target to Cdn$68

Stifel Canada upgraded BRP Inc. (TSX:DOO:CN) (NASDAQ:DOOO) from Hold to Buy, raising the price target to Cdn$68.00 from Cdn$49.00, citing an anticipated return to sales growth in Q2 fiscal year 2026 after seven consecutive quarters of decline. The upgrade reflects optimism regarding improved EBITDA margins and EPS in the second half of fiscal year 2026, driven by nearly completed inventory depletion and easier year-over-year comparisons, coupled with diminished tariff concerns and a compelling valuation at 6x forward EBITDA, a 35% discount to Polaris (NYSE:PII).

Analysis

Stifel Canada has upgraded BRP Inc. (TSX:DOO:CN, NASDAQ:DOOO) to Buy from Hold, concurrently raising its price target by 38.8% to Cdn$68.00 from Cdn$49.00. This upgrade occurs despite BRP reporting its seventh consecutive quarter of sales decline in Q1 fiscal year 2026. Stifel's analysts anticipate a reversal of this trend, projecting sales growth to resume in Q2 fiscal year 2026, with subsequent year-over-year revenue increases expected for the following three quarters. Further optimism stems from forecasts for improved EBITDA margins and earnings per share in the second half of fiscal year 2026. Key drivers for this positive outlook include the near completion of BRP's inventory depletion, the advent of easier year-over-year comparable periods, and a significant reduction in the perceived long-term risk from tariffs. Critically, BRP's valuation is highlighted as compelling, trading at 6 times forward EBITDA, which represents a 35% discount to its competitor Polaris (NYSE:PII). This valuation, combined with the anticipated operational turnaround, positions BRP Inc. favorably for potential outperformance according to Stifel.

Key Decisions for Investors

• Investors could consider the upgraded Buy rating and increased price target as a signal for a potential entry point, given the anticipated sales recovery and attractive valuation relative to peers.
• Monitor BRP's Q2 fiscal year 2026 sales figures closely for confirmation of the projected return to growth, as well as EBITDA margin and EPS developments in the second half of the fiscal year.
• Evaluate the current 35% valuation discount to Polaris (PII) on a forward EBITDA basis as a key component of the investment thesis, while acknowledging the risk associated with the preceding seven quarters of sales decline which Stifel believes is now abating.