BRP Inc. (DOOO): A Shift in Strategy—Is It Still a Top Boating Stock?

BRP Inc. (NASDAQ: DOOO), once a leader in recreational boating with brands like Alumacraft and Sea-Doo, has undergone a transformative shift in recent years. In early 2025, the company announced plans to divest its Marine division—a move that redefines its role in the boating sector. While this strategic pivot raises questions about its standing as a "boating stock," BRP’s refocused priorities and financial resilience suggest it remains a compelling investment, albeit in a reimagined form. Here’s what investors need to know.

The Marine Divestiture: A Bold Strategic Move

BRP’s decision to sell its Marine division, finalized by Q1 2026, marked a clear pivot toward its core Powersports business. The sale included boat brands like Alumacraft, Manitou, and Telwater (Quintrex, Stacer, etc.), but retained its Sea-Doo personal watercraft, jet propulsion systems, and Rotax engines—key assets for the boating sector. This move aimed to streamline operations, improve margins, and focus resources on high-growth segments like ATVs, snowmobiles, and utility vehicles.

While the Marine division’s discontinuation reduced BRP’s direct exposure to traditional boat manufacturing, its retained marine assets—particularly Sea-Doo’s premium watercraft and propulsion technology—keep it relevant in niche boating markets. The shift also allowed BRP to address declining marine sector profitability, which contributed to a $275.7 million net loss from discontinued operations in FY2025.

Financials: A Tough Year, But Strength Lingers

BRP’s FY2025 results reflected the challenges of its transition:
- Revenue fell 21.4% to $7.8 billion, driven by reduced shipments and inventory management efforts.
- Net income dropped 93.3% to $62.7 million, though Normalized EBITDA remained robust at $1.0 billion.
- Free cash flow exceeded $450 million, supporting a dividend increase to $0.215/share and $277 million in shareholder returns.

Despite the decline, BRP’s operational agility shone:
- North American network inventory dropped 13% (excluding snowmobiles), easing dealer pressures.
- Market share gains in key Powersports segments: side-by-side vehicles (up 11%) and ATVs (up 4%) since pre-pandemic levels.

The stock surged 8.9% post-Q4 earnings in late 2024, reflecting investor optimism about its strategic focus and cost discipline.

Analyst Outlook: Strong Buy, But Risks Remain

Analysts remain bullish, with a "Strong Buy" consensus (based on 5 Wall Street analysts):
- Average price target: C$106.00, implying a 49.8% upside from early 2025 prices.
- Key drivers: Powersports market leadership, innovation in electric vehicles (e.g., Can-Am electric motorcycles), and a strong balance sheet.

However, risks loom large:
- Trade Policy Uncertainty: BRP deferred FY2026 guidance due to potential U.S. tariff hikes, which could cost $40 million annually.
- Macroeconomic Pressures: Rising interest rates and inflation continue to dampen consumer demand for discretionary spending.

Why BRP Still Matters in Boating

While BRP no longer manufactures traditional boats, its Sea-Doo watercraft and Rotax marine engines remain critical to its boating relevance:
- Sea-Doo’s premium positioning: Dominates the personal watercraft market, with innovations like electric models and adaptive jet propulsion.
- Rotax engines: Supply chain resilience and global partnerships (e.g., with Yamaha) underpin its reliability.

BRP’s proximity-based manufacturing (e.g., Mexico for watercraft) also buffers it from supply chain shocks, a lesson learned from past tariff disputes.

Conclusion: A Hold for Now, but a Buy for the Long Term

BRP’s strategic pivot out of traditional boat manufacturing has reshaped its identity, but it retains a strong foothold in high-margin boating segments through Sea-Doo and Rotax. Analysts’ bullish ratings and robust free cash flow suggest confidence in its long-term prospects, particularly as it capitalizes on Powersports market share gains and electric vehicle innovation.

However, near-term risks—tariffs, soft demand, and inventory overhangs—warrant caution. Investors should monitor FY2026 guidance closely, expected to be updated once trade policies stabilize. For those with a multi-year horizon, BRP’s blend of operational discipline, innovation, and analyst support positions it as a hold today and a buy if valuation dips further.

In short, BRP may no longer be a "traditional boating stock," but its redefined role in marine propulsion and premium watercraft makes it a compelling play for investors willing to ride out short-term turbulence.

Final Note: Stay tuned for updates on the Marine division sale and FY2026 guidance—key catalysts for DOOO’s next leg of growth.*