BMO Capital Markets analyst Gerrick Johnson forecasts 10 percent sales growth for BRP when the Canadian OEM reports its fourth quarter results March 28.
Among the highlights of Johnson’s report include:
- We anticipate the company will report EPS of $0.50 compared with $0.35 in the year-ago period. The Street consensus is set at $0.45. We expect sales growth of 10 percent to C$870 million, $20 million ahead of the Street consensus of C$850 million. We believe gross margin will show 90 basis points of improvement to 26.0 percent.
- While most other leisure companies we follow have struggled with difficult 4Q weather, we believe BRP’s EPS could be better than the Street expects owing to 1) strong sell-through of Ski-Doo snowmobiles, 2) positive feedback on the early performance of the Sea-Doo Spark PWC, 3) expanding distribution of Can-Am ORV product, and 4) gains in the Evinrude and Rotax marine propulsion businesses.
- We rate BRP Outperform with a $32 target price. Our target represents a 17x multiple on our FY2015 (CY2014) EPS estimate of $1.85 or 13x our FY2016 (CY2015) EPS estimate of $2.50. We view BRP as a high-quality play on an early-stage economic recovery. Risks to our target include deterioration in the economy or consumer confidence.
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