Analyst Note| Jaime M. Katz, CFA |
We don't plan any material change to our CAD 122/$97 per share fair value estimate for narrow-moat BRP after incorporating updates from its investor day. While an updated fiscal 2025 plan was offered, calling for more than CAD 12 billion in sales and EPS of CAD 13.50-CAD 14.50, this wasn't far from our existing fiscal 2025 projections, which included sales of above CAD 11 billion and EPS of CAD 13.67. For reference, the prior 2025 plan (issued in 2019) sought CAD 9.5 billion in sales and EPS of CAD 7.50 (which the firm handily surpassed in 2021, at CAD 9.92 in adjusted EPS). The majority of the outlook's upside stems from the Can-Am brand, which is set to capture more than CAD 7 billion in sales in fiscal 2025, CAD 2 billion higher than earlier forecasts. While an incremental CAD 100 million in cost savings is now set to be achieved (on top of the CAD 300 million set forward in 2019), we don't expect to raise our long-term EBITDA margin outlook much higher than the 16% we already model (a touch lower than the 17% the firm is targeting), as we expect sales programs could become more competitive across the peer set, constraining profit gains.