RBC UpgradeAlso previewing powersport vehicle manufacturers, RBC Dominion Securities analyst Joseph Spak raised his revenue forecast for BRP Inc. to $2.3-billion from $2.29-billion and earnings per share estimate to $2.55 from $2.53. The averages on the Street are $2.31-billion and $2.63. That led him to bumped up his target for shares of the Valcourt, Que.-based company to $113 from $111 with an “outperform” rating. The average is $131.75.
“Our $113 12-month price target is based on applying a 10x multiple to our FY2023 EPS estimate,” he said. “This is in line with the multiple we use for closest peer PII which we believe BRP should trade at least in line with. While a P/E of 10 times is below BRP’s past 3-year NTM [next 12-month] average of 14 times, it is more in line with the average over the past 12 months. We believe the lower than historical multiple is due to concerns about an economic impact on demand, margin pressure, and potential overearning. While we acknowledge these risks, we believe they are more than priced in. Our price target and implied return support our Outperform rating.”