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On Friday, Jefferies analyst Sheila Kahyaoglu revised the price target for Science Applications International Corporation (NASDAQ:SAIC) shares, reducing it to $110.00 from the previous target of $125.00. Despite this change, the firm has maintained its Hold rating on the company’s stock. Currently trading at $106.96, InvestingPro analysis suggests the stock is slightly undervalued, with analyst targets ranging from $101 to $155. Kahyaoglu’s assessment comes ahead of SAIC’s scheduled earnings report for the fourth fiscal quarter (October Quarter) on March 17, before the market opens.
Kahyaoglu predicts an adjusted earnings per share (EPS) of $2.04 for the upcoming report, which is slightly below the consensus estimate of $2.09. The analyst anticipates a revenue growth of 4%, which is an improvement compared to the year-to-date growth of 2% but falls short of the consensus estimate of 5%. The forecasted growth rate is modest but indicates an upward trend for the company. According to InvestingPro data, SAIC has maintained profitability with a trailing twelve-month revenue of $7.38 billion and a gross profit margin of 11.55%.
The revenue guidance for SAIC may see a slight adjustment, with projected figures ranging between $7.5 billion and $7.7 billion. This represents a growth rate of 1-3%, which is a slight decrease from the previously estimated range of $7.55 billion to $7.75 billion. The adjustment in revenue guidance is attributed to uncertainties surrounding government funding, particularly in light of potential delays in procurement processes.
These potential procurement delays are expected as agencies take time to address possible contract cancellations and disruptions within the workforce. This cautious approach by agencies could impact SAIC’s operations and financial performance, prompting the revised price target.
Investors and stakeholders in Science Applications International Corporation are likely to keep a close watch on the company’s forthcoming earnings report to gauge the impact of these factors on its financial health and future performance. The updated guidance and earnings results will provide a clearer picture of the company’s standing amidst the uncertain funding environment. InvestingPro reveals that management has been actively buying back shares, and the company has maintained dividend payments for 13 consecutive years, demonstrating commitment to shareholder returns despite market uncertainties. For deeper insights into SAIC’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, CACI International reported a significant 45% decrease in contract awards for the second quarter, totaling $1.2 billion compared to $2.2 billion in the same period last year. This has raised concerns about potential government spending cuts affecting the sector. However, analysts like Jefferies’ Sheila Kahyaoglu and Truist’s Tobey Sommer provided mixed views, with Kahyaoglu suggesting the reaction might be "overblown" and Sommer noting CACI’s strong performance and alignment with government initiatives. Meanwhile, Elon Musk’s skepticism about achieving $2 trillion in federal budget cuts under the Trump administration led to a positive market response for government-services stocks, including CACI and Booz Allen (NYSE:BAH) Hamilton.
On another front, TD Cowen downgraded Science Applications International Corporation’s stock rating from Buy to Hold, reducing the price target to $120 due to concerns over the company’s performance and sector sentiment. The firm pointed to SAIC’s slower organic growth compared to its peers. In a separate development, SAIC announced the resignation of board member Dana Deasy, effective immediately, due to a change in his employment status. The company emphasized that his departure was not due to any disagreements with its operations or policies. These recent developments provide a snapshot of the current dynamics within the government services sector.
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