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Investing.com - Wells Fargo lowered its price target on Jacobs Engineering Group Inc. (NYSE:J) to $130.00 from $160.00 on Friday, while maintaining an Equal Weight rating on the stock. This new target aligns closely with InvestingPro’s Fair Value assessment, which suggests the company is currently slightly undervalued after Friday’s selloff. Analyst consensus remains moderately bullish with a 1.94 rating (where 1 is Strong Buy).
The engineering firm’s shares dropped 11% during the session, compared to a 2% decline in the S&P, following industry concerns about artificial intelligence potentially leading to commoditization and disintermediation in the sector.
The price target reduction comes amid a broader derating of IT consulting and staffing stocks, with Wells Fargo noting that comments from AECOM about potential AI job displacement have heightened investor concerns about the long-term outlook for the sector. InvestingPro data shows Jacobs trading at a P/E ratio of 32.84 and price-to-book of 4.21, both considered high multiples that could face pressure in this environment. InvestingPro’s Financial Health score for Jacobs stands at "FAIR" with moderate debt levels.
Jacobs has countered these concerns by arguing that AI and digital twins are actually enabling the company to expand its addressable market to serve a broader range of projects.
The bearish perspective, according to Wells Fargo, centers on uncertainty regarding the magnitude of potential job displacements due to AI adoption and the resulting revenue reduction this might cause for engineering firms like Jacobs.
In other recent news, Jacobs Engineering Group Inc. reported impressive financial results for the fourth quarter of 2025. The company surpassed analyst expectations with an earnings per share (EPS) of $1.75, exceeding the projected $1.67. Additionally, Jacobs Engineering’s revenue reached $3.2 billion, beating the forecasted $3.15 billion. These results highlight the company’s strong performance in the quarter. In another development, Baird downgraded Jacobs Engineering’s stock rating from Outperform to Neutral, citing valuation concerns. The firm also adjusted its price target for the company to $146.00 from $161.00. Despite the downgrade, Baird noted the credibility of a potential combination with WSP Global, estimating about a 30% chance for a deal primarily structured with stock. These recent developments provide investors with valuable insights into Jacobs Engineering’s current market position and future prospects.
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