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BRP Inc. (NASDAQ:DOOO) gained in early trading on Tuesday after Citi upgraded the recreational vehicle stock to a Buy rating from Neutral.
The firm turned constructive on BRP (DOOO) after factoring in the most recent round of ORV channel checks, Q2 earnings, and conducting a deep dive on powersports inventories. Citi fired off a pair trade by also keeping an Underweight rating on sector peer Polaris (PII). Citi said the sizable valuation premium accorded to Polaris does not mirror the performance of the two companies. BRP (DOOO) is expected to outgrow Polaris going forward and for the valuation gap to narrow over time.
Citi assigned a price target of $94 to BRP (DOOO). Shares of BRP moved 1.15% higher in premarket action on Tuesday to $74.50 vs. the 52-week trading range of $58.71 to $92.74. The Seeking Alpha Quant Rating on DOOO is Hold, with a high factor grade for profitability offset by low grades for valuation and momentum.