DOO: Tariff Headwinds Will Set Up 2026 Earnings And Share Capture Upside

Analysts have trimmed the BRP fair value estimate from CA$117.70 to about CA$97.22 after lower Street price targets and updated models that factor in Section 232 tariffs, suspended fiscal 2027 guidance, a slightly higher discount rate, and more conservative assumptions for revenue growth, profit margins, and future P/E.

Analyst Commentary

Recent research on BRP has turned more cautious overall, with several firms cutting price targets and, in some cases, downgrading ratings after the announcement of Section 232 tariffs and the suspension of fiscal 2027 guidance. Even so, there are still analysts who see long term upside potential, which is why views are split.

Bullish Takeaways

Bullish analysts highlight BRP's long term brand strength and customer loyalty as key supports for the investment case, even as near term tariffs and guidance changes weigh on sentiment and fair value estimates.
Some models still factor in what is described as an attractive share capture story in powersports, with expectations that the company can continue to win market share over time despite softer demand conditions mentioned by research providers.
There is an emphasis from bullish research on BRP's positioning for an earnings setup in 2026, with confidence that the business can execute on product, cost and mix initiatives once current tariff related uncertainty is better understood.
A few bullish analysts retain positive ratings while trimming price targets, indicating that they view the stock's valuation as already reflecting a meaningful amount of tariff and macro risk.

Bearish Takeaways

Bearish analysts are focused on the new Section 232 tariffs as a major expense headwind, feeding through to lower margin assumptions and reduced earnings power in updated models, which in turn compresses target prices.
The suspension of fiscal 2027 guidance is seen as a key risk marker, leading to greater uncertainty around BRP's medium term growth path and making it harder for valuation models to rely on prior long range targets.
Several research providers have downgraded the stock, citing a tougher near term setup for execution as tariffs ramp and as investors wait for clearer visibility on demand, pricing and potential cost offsets.
More conservative assumptions for revenue growth, profitability and future P/E multiples are increasingly common across recent reports, pointing to concern that the previous framework for valuing BRP may have been too optimistic under the new tariff regime.

What's in the News

Can Am launched the 3 Wheel Collective, a global community platform that connects 3 wheel riding groups, local networks and new riders. It offers curated rides, exclusive events, merchandise and access to established communities, and also supports International Female Ride Day each May.
BRP issued 2027 guidance, with total company revenues expected in the range of CA$8.9b to CA$9.15b and net income projected between CA$410 million and CA$480 million.
BRP completed a share repurchase tranche between November 1, 2025 and December 9, 2025, buying back 485,400 shares, or 0.66% of shares, for CA$50.3 million under a program announced on December 6, 2024.
BRP announced a quarterly dividend of CA$0.25 per share, payable on April 24, 2026, with an ex dividend and record date of April 10, 2026.
Can Am introduced the MeatEater Defender, a custom Can Am Defender HD11 MAX Lonestar equipped with accessories aimed at hunting, conservation work and outdoor trips. It was showcased at several outdoor and sportsman events across the United States.

Valuation Changes

Fair Value: trimmed from CA$117.70 to about CA$97.22, a reduction of roughly 17%
Discount Rate: risen slightly from 6.94% to about 7.17%, reflecting a higher implied risk level in the updated model
Revenue Growth: eased from about 6.20% to roughly 5.93%, indicating more cautious top line assumptions
Net Profit Margin: reduced from about 6.91% to roughly 6.49%, pointing to lower expected profitability
Future P/E: brought down from about 15.0x to roughly 13.4x, implying a more conservative valuation multiple

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Key Takeaways

Expansion in electric vehicles and modular designs enhances innovation, capturing greater margins and positioning BRP well amid accelerating global electrification trends.
International growth and increased technology-driven aftermarket services diversify revenue sources, while optimized dealer inventory supports margin recovery and competitive gains.
Macroeconomic, regulatory, and competitive pressures threaten BRP's revenue growth, market share, and profitability, especially given reliance on combustion engines and cyclical industry demand.

Catalysts

About BRP

Designs, develops, manufactures, and sells powersports vehicles and marine products in the Mexico, Canada, Austria, the United States, Finland, Australia, and Germany.What are the underlying business or industry changes driving this perspective?

The rapid expansion of BRP's electric vehicle lineup (notably the Outlander electric ATV and electric motorcycle), combined with modular design efficiencies, positions the company to capture incremental revenue and margin improvement as consumer demand for sustainable, innovative recreational vehicles accelerates amid global electrification and regulatory momentum. (Impacts: topline growth, margin expansion)
Ongoing international growth, with strong double-digit retail increases in Latin America and recovery in Asia-Pacific, underscores BRP's opportunity to leverage rising disposable income and shifting leisure preferences in global markets, supporting a multi-year runway for revenue growth and geographic diversification beyond North America. (Impacts: revenue diversification, revenue growth)
The completed dealer network inventory rightsizing now allows for better alignment of wholesale and retail sales, enabling BRP to optimize pricing, reduce promotional activity, and rapidly distribute new products-especially the new Can-Am Defender series-supporting both revenue growth and gross margin recovery as market conditions improve. (Impacts: gross margin, revenue, earnings)
Dealers' very positive reaction to recent product launches and strategic price adjustments, coupled with a robust pipeline of model upgrades and technology enhancements (connectivity, customization options), positions BRP to gain market share within key product segments, driving both higher revenue and improved net margins. (Impacts: revenue, net margins)
Increasing penetration of technology and connectivity features (e.g., IoT, software upgrades, telematics in vehicles) creates potential for new high-margin recurring revenue streams from aftermarket services, subscriptions, and accessories, supporting long-term earnings growth and higher overall profitability. (Impacts: margin accretion, earnings growth)

BRP Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming BRP's revenue will grow by 5.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 4.1% today to 6.5% in 3 years time.
Analysts expect earnings to reach CA$651.2 million (and earnings per share of CA$9.41) by about May 2029, up from CA$342.7 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as CA$752.1 million.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 13.5x on those 2029 earnings, down from 16.5x today. This future PE is lower than the current PE for the CA Leisure industry at 16.5x.
Analysts expect the number of shares outstanding to grow by 0.12% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.17%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Sustained macroeconomic uncertainty-including high inflation, elevated interest rates, and tariff volatility-continues to weigh on consumer confidence, particularly in the U.S., potentially dampening retail demand for BRP's discretionary powersport products and impacting revenue growth.
Ongoing tariff increases and expansions on steel, aluminum, and copper, as well as the potential for further trade policy changes and USMCA renegotiation, create persistent cost headwinds; even with mitigation efforts, these could compress gross margins and strain earnings.
BRP's product portfolio remains heavily dependent on internal combustion engines, while global climate change regulations and tightening emissions standards may further pressure costs, compliance, and market access, risking long-term revenue and margin declines if electrification efforts lag.
The powersports industry remains highly cyclical and vulnerable to economic downturns and recessions, exposing BRP to prolonged periods of weaker sales, inventory build-up, intensified promotional activity, and subsequent gross margin erosion.
Intensifying competition-including high promotional activity by other OEMs, new entrants in electrified and shared mobility segments, and targeted innovation by established players-may limit BRP's ability to sustain market share gains, leading to slower top-line growth and potential pressure on long-term profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CA$97.22 for BRP based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$117.0, and the most bearish reporting a price target of just CA$80.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be CA$10.0 billion, earnings will come to CA$651.2 million, and it would be trading on a PE ratio of 13.5x, assuming you use a discount rate of 7.2%.
Given the current share price of CA$76.58, the analyst price target of CA$97.22 is 21.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Future Market Leadership Will Be Driven By Electrification And Global Expansion Plans