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On Tuesday, Jefferies analyst Sheila Kahyaoglu adjusted the price target for CACI International (NYSE:CACI) shares, reducing it to $455 from the previous target of $520, while reaffirming a Buy rating on the stock. Currently trading at $371.48, CACI shows a PEG ratio of 0.6, suggesting attractive valuation relative to its growth potential. The adjustment follows a series of investor meetings in London with CACI’s CEO John Mengucci and CFO Jeffrey MacLauchlan. According to InvestingPro, the company maintains a GOOD financial health score, with additional insights available in the comprehensive Pro Research Report.
During the meetings, the CACI executives shared insights into the company’s strategic direction. Since 2012, CACI has been shifting away from consulting-type work, focusing instead on areas that align with government priorities. This strategic shift has yielded results, with revenue growing 14.04% over the last twelve months to $8.13 billion. These include "peace through strength" with 80% of their work supporting the Department of Defense and Intelligence communities, "protecting our borders" accounting for 9% of their work for Customs and Border Protection, and an emphasis on software-defined solutions.
The company’s financial strategy was also discussed, highlighting the authorization of a $337 million share repurchase program. This buyback initiative is expected to be accretive to earnings per share (EPS), potentially enhancing shareholder value. The repurchase represents about 2% of the company’s EPS, assuming a threefold leverage, with a 2.3 times leverage already factored into calculations.
The reaffirmation of the Buy rating by Jefferies indicates a continued positive outlook on CACI International’s stock, despite the lowered price target. The company’s alignment with critical government priorities and proactive financial strategies are key elements underpinning this perspective.
In other recent news, CACI International reported strong financial results for the first quarter of fiscal year 2025. The company’s earnings per share (EPS) reached $5.95, surpassing the forecast of $5.20, and revenue climbed to $2.1 billion, exceeding the expected $2.02 billion. CACI also revised its revenue guidance for FY2025 upwards to between $8.1 billion and $8.3 billion. Truist Securities maintained a Buy rating on CACI, citing confidence in the company’s strong performance and limited exposure to Federal Civilian spending. Despite a reported 45% decrease in contract awards for the second quarter, CACI’s alignment with Department of Government Efficiency initiatives suggests a favorable outlook. Analysts noted that while investor concerns about potential government spending cuts exist, CACI’s capabilities and customer mix provide a robust position in the market. CACI’s significant contract wins, particularly with the U.S. Navy, have bolstered investor confidence. The company’s strategic acquisitions, such as Applied Insight, further enhance its market position and growth potential.
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