Evercore ISI sets $38 price target on Karman stock with Outperform rating

On Monday, Evercore ISI initiated coverage on Karman Holdings Inc (NYSE:KRMN), assigning an Outperform rating and setting a price target of $38.00. Currently trading at $28.78, the stock has experienced a significant 13.9% decline over the past week, according to InvestingPro data. The firm’s optimistic stance is based on Karman’s potential to maintain mid to high teens growth in sales and earnings per share (EPS) in the coming years, supported by several key industry drivers.

The research firm highlighted multiple factors contributing to Karman’s growth prospects, including the rapid increase in US orbital launch volume, with Karman supplying products to every US launch provider. Additionally, the heightened US defense focus on missile defense and hypersonics, along with a multi-year restocking of missile and missile defense inventories by the US and its NATO allies, are seen as positive influences on the company’s performance. With a market capitalization of $3.8 billion, Karman maintains strong liquidity metrics, including a current ratio of 1.87.

Evercore ISI also noted Karman’s role as a mission-critical provider of complex solutions with differentiated intellectual property. The company’s portfolio of highly engineered products and program diversification, along with its positioning for an era of efficiency, were cited as further reasons for the positive outlook.

The firm’s acquisition strategy was also mentioned, with Karman being recognized as an acquirer of choice with a solid track record. These elements collectively support Evercore ISI’s belief that Karman is well-positioned for sustained growth.

For the fiscal year 2025, Evercore ISI projects sales of $409 million, which would represent an 18% year-over-year increase, and an EPS of $0.36. This implies an EBITDA margin of 31%, showing an improvement of 100 basis points year-over-year. InvestingPro analysis reveals the company is currently trading at elevated EBITDA and revenue multiples, with additional insights available through their comprehensive financial health assessment tools.

In summary, Evercore ISI’s Outperform rating and $38 price target reflect a 32% implied upside from the current stock price of $28.78, while other analysts maintain targets ranging from $35 to $40. The firm concludes that Karman Holdings Inc is poised for continued growth, leveraging its unique position in the rapidly expanding segments of the military and space markets. Discover more detailed valuation metrics and 10 additional key insights about KRMN through InvestingPro.

In other recent news, Karman Holdings has been the subject of multiple analyst evaluations following its recent IPO. Citi initiated coverage with a Buy rating and a price target of $42, citing the company’s strategic position in the defense sector and its potential for revenue growth of approximately 20% through 2027. Baird also began coverage, assigning an Outperform rating and setting a price target of $40. They highlighted Karman Holdings’ high revenue growth rate and strong EBITDA margins, which exceed 30%. RBC Capital Markets joined with an Outperform rating and a $35 price target, noting the company’s involvement in over 100 national security and space programs as a growth driver.

The company recently opened its IPO at $30, surpassing the initial pricing of $22, with a total offering of 23 million shares. Karman Holdings’ focus on mission-critical systems for defense and space programs positions it favorably in the market. The firm’s financial performance, including robust free cash flow conversion rates and strong EBITDA margins, has been a focal point for analysts. These developments reflect a positive outlook for Karman Holdings within the defense technology sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.