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On Wednesday, KeyBanc Capital Markets adjusted its outlook on Parsons Corp (NYSE:PSN), a technology-focused defense, intelligence, security, and infrastructure engineering firm, by lowering its price target. The new target has been set at $73.00, down from the previous $76.00, while the firm has maintained its Overweight rating on the stock. According to InvestingPro data, PSN shares currently trade at $64.08, having declined over 40% in the past six months. The stock appears undervalued based on InvestingPro’s Fair Value analysis.
Sangita Jain, an analyst at KeyBanc, provided insights into the rationale behind the adjustment. Jain noted a reduction in both the earnings estimates and the target multiple, which now stands at 12 times the anticipated adjusted EBITDA for the year 2026. This multiple is slightly below Parsons Corp’s historical average of 12.4 times since its initial public offering. The company’s current EBITDA stands at $553.83 million, with impressive revenue growth of 24% over the last twelve months. InvestingPro analysis shows the company maintains a GOOD financial health score, operating with a moderate level of debt.
The revision reflects concerns surrounding the risks associated with Dogecoin (DOGE), a cryptocurrency that has seen significant volatility. Jain suggested that these concerns might be in their "later innings," implying a potential stabilization or resolution in the near future.
The analyst expressed confidence in the achievability of the firm’s estimates, even in a scenario where outcomes for a confidential contract might be less favorable than hoped. Furthermore, Jain anticipates that as the uncertainties related to the confidential program and Dogecoin subside throughout the year, there could be a possibility for the company’s valuation multiple to experience a positive re-rating. This would likely occur as the market begins to focus more on Parsons Corp’s core business momentum and upcoming contract award catalysts anticipated under the Trump administration.
Parsons Corp’s stock performance and investor sentiment may be influenced by these developments, as well as by broader market conditions and the company’s ability to secure and execute new contracts. As the year progresses, clarity on the confidential program mentioned by Jain may serve as a pivotal factor for the company’s stock trajectory. Analyst targets currently range from $58 to $122.12, reflecting diverse market opinions. For deeper insights into PSN’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.
In other recent news, Parsons Corporation has secured a position on a $1.5 billion contract with the Air Force Civil Engineering Center to provide architect-engineer services at U.S. Air Force installations globally. This contract will focus on environmental restoration and compliance, including addressing contaminants like PFAS. Additionally, Parsons has been awarded a $24 million contract to support the Naval Medical (TASE:BLWV) Research Command’s Biological Defense Research Directorate, aimed at enhancing global disease surveillance and pathogen detection. In a move to enhance shareholder returns, Parsons announced an increase in its stock repurchase authorization to $250 million, reflecting the company’s strong operating results and cash flow.
Sealing Technologies, a subsidiary of Parsons, has been awarded a prototype agreement by the Department of Defense to develop the Joint Cyber Hunt Kit, which aims to bolster U.S. national security cyber operations. Meanwhile, Benchmark analyst Josh Sullivan adjusted Parsons’ stock price target to $90 from $130, while maintaining a Buy recommendation. Sullivan noted that Parsons’ diverse contract portfolio and limited exposure to Department of Defense maneuvers make it less affected by current market challenges. Parsons is expected to benefit from several potential catalysts, including international relations and infrastructure projects.
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