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On Friday, Cantor Fitzgerald analyst Yi Fu Lee adjusted the price target for BigBear.ai Holdings (NYSE:BBAI) to $6.00, down from the previous $8.00, while keeping an Overweight rating on the stock. The company, currently trading at $4.20 with a market capitalization of $1.06 billion, has shown significant price volatility according to InvestingPro data. BigBear.ai reported a revenue increase of 8.0% to $43.8 million for the fourth quarter of 2024, which did not meet the company’s own forecasts or the FactSet consensus estimates. While the company’s trailing twelve-month revenue growth stands at just 1.98%, it ended the quarter with a significant backlog valued at $480 million, marking a 2.5 times year-over-year increase. InvestingPro analysis reveals 8 additional key metrics that could impact the company’s future performance.
The company’s financial results also featured some positive outcomes, including an adjusted EBITDA gain and enhanced balance sheet flexibility. However, InvestingPro’s Financial Health Score indicates WEAK overall health, with a concerning current ratio of 0.46. These metrics, along with the company’s efforts in core product development and balance sheet restructuring, paint a complex picture of its financial position.
Furthermore, BigBear.ai issued guidance for the year 2025, projecting a top-line growth ranging from 1.1% to 13.7%. This forecast falls short of the growth anticipated by FactSet consensus figures. The company’s performance and projections reflect its ongoing strategic initiatives but also highlight the challenges it faces in meeting market expectations.
The lowered price target comes as BigBear.ai navigates its strategic priorities amidst a backdrop of missed revenue targets. The Overweight rating suggests that Cantor Fitzgerald still sees potential in the company’s stock despite the recent adjustments to its financial outlook. The new guidance sets a cautious tone for BigBear.ai’s growth trajectory in the coming year.
In other recent news, BigBear.ai Holdings reported fourth-quarter earnings that fell short of expectations, with revenue reaching $43.8 million, significantly below the anticipated $54.6 million. This revenue miss contributed to a full-year guidance shortfall, as the company projected 2025 revenue between $160 million and $180 million, compared to analyst projections of $193.9 million. Additionally, adjusted earnings per share came in at -$0.43, missing estimates of -$0.06. Despite these challenges, the company noted an improvement in gross margin to 37.4% in Q4 2024 from 32.1% in Q4 2023 and reported an ending backlog of $418 million, a 2.5x increase from the previous year.
Analyst firm H.C. Wainwright adjusted its price target for BigBear.ai to $6.00 from $7.00, maintaining a Buy rating despite the earnings miss. The firm remains optimistic about BigBear.ai’s long-term potential, citing opportunities in sectors like border security and defense. The company has taken steps to improve its financial standing, including de-leveraging its balance sheet by reducing net debt from $150 million to $27 million through warrant exercises and debt conversions. BigBear.ai’s leadership highlighted major contract wins and a strengthened financial position as positive developments. However, they cautioned that future revenue could be impacted by potential U.S. government shutdowns or shifts in national security priorities.
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