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On Thursday, KeyBanc Capital Markets adjusted its outlook on Parsons Corp . (NYSE: NYSE:PSN) by reducing the company’s price target from $102.00 to $76.00, while still maintaining an Overweight rating on the stock. The stock currently trades at $65.08, having declined over 11% in the past week. According to InvestingPro data, the stock’s RSI suggests oversold conditions, with shares trading near their 52-week low of $61.70. The decision comes after Parsons reported a lower than anticipated adjusted EBITDA for the fourth quarter of 2024 and provided a 2025 guidance that did not meet expectations. These results were attributed to legacy construction charges and a normalization of activities on a confidential contract. Despite recent challenges, InvestingPro analysis shows the company maintains good financial health with an overall score of 2.59/5, and analysts expect both revenue and net income growth in the current year.
KeyBanc analysts have recalibrated their estimates to account for the recent contract headwinds faced by Parsons. The revised price target of $76.00 is based on a 12.25x multiple of the projected 2026 adjusted EBITDA. Despite the reduction in the price target, the firm has taken what it describes as a conservative approach to modeling the confidential contract’s future impact.
The analysts expect more clarity on the confidential program in the coming months. They believe that as concerns regarding the DOGE program and the confidential contract begin to ease, the focus will shift to Parsons’ core business momentum and upcoming opportunities, particularly under the Trump administration’s policies. The company’s strong fundamentals are evident in its impressive revenue growth of 24% in the last twelve months, with analysts forecasting 24% growth for 2025.
KeyBanc’s statement emphasized the disappointment stemming from the adjusted EBITDA miss and the lower guidance for 2025. However, they maintain an Overweight rating, signaling a belief in Parsons’ potential to recover and perform well in the future.
The lowered price target reflects KeyBanc’s reassessment of Parsons’ valuation in light of the recent financial results and guidance. The firm’s analysts suggest that the stock could re-rate positively as the company moves past the current challenges and leverages its core business strengths.
In other recent news, Parsons Corporation reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.78, which fell short of the anticipated $0.91. The revenue also missed expectations, coming in at $1.73 billion against a forecast of $1.76 billion. Despite these quarterly misses, Parsons achieved full-year revenue exceeding $6.7 billion for the first time, highlighting significant growth in adjusted EBITDA and contract awards. Looking forward, Parsons plans to continue its acquisition strategy in 2025, with expectations for two to three new acquisitions. The company has set a revenue guidance of $7.0-$7.5 billion for 2025, with a 5% organic growth target. Parsons also anticipates adjusted EBITDA between $640 million and $710 million, aiming for continued margin expansion. Additionally, Parsons was recently named one of America’s most trusted companies by Forbes, and its Kicking Horse Canyon project received the 2024 Best Project Award in the Road Highway category by Engineering News Record.
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