KeyBanc maintains Sector Weight on Jacobs Engineering stock

Monday, Jacobs Engineering Group Inc. (NYSE:J), a $14.86 billion engineering and construction firm with annual revenue of $11.62 billion, maintained its Sector Weight rating as per KeyBanc’s latest review. Sangita Jain from KeyBanc reiterated the rating after a series of investor meetings with Jacobs’ CEO Bob Pragada and CFO Venk Nathamuni. The meetings, which spanned over two days last week, provided an opportunity for the executives to discuss several key aspects of the company’s strategy and outlook.

The conversations with investors focused on the impact of the current administration’s policy priorities on Jacobs’ project workflow and timing. Jain highlighted the company’s projected 6-8% revenue compound annual growth rate (CAGR) through the fiscal year 2029, which was a focal point during the recent analyst day. Another topic of interest was the company’s goal to expand its EBITDA margin by 320 basis points through FY29, building upon its current EBITDA of $1.24 billion. According to InvestingPro analysis, Jacobs operates with a moderate level of debt and has demonstrated strong returns over the last five years.

The discussion also touched upon Jacobs Engineering’s capital allocation strategies for both the short and long term. Jain noted the company’s robust balance sheet, with a healthy current ratio of 1.25, and the potential for strong free cash flow (FCF) creation, which are critical factors in planning for future investments and shareholder returns. The company maintains a moderate debt-to-equity ratio of 0.72, supporting its financial flexibility.

Jain’s commentary did not indicate any change in the investment firm’s stance on Jacobs Engineering stock, as the Sector Weight rating was maintained without adjustments to the price target or investment outlook. The stock, currently trading at $121.25, shows analyst targets ranging from $134 to $176, suggesting potential upside. InvestingPro data indicates the stock is trading near its Fair Value, with a relatively high P/E ratio of 24.72. For deeper insights into Jacobs’ valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.

Investors and stakeholders in Jacobs Engineering Group Inc. will likely monitor the company’s progress towards achieving the discussed revenue growth and margin expansion targets, as well as how effectively it manages its capital allocation in the context of the current economic and policy environment. With six consecutive years of dividend increases and a demonstrated track record of profitability, the company maintains a stable financial profile despite market uncertainties.

In other recent news, Jacobs has announced several key developments that may interest investors. The company outlined its growth strategy and financial targets during its 2025 Investor Day, aiming for 6-8% organic adjusted net revenue growth and a 16%+ adjusted EBITDA margin by fiscal year 2029. Jacobs also plans to return capital to shareholders with an increased quarterly dividend and a new $1.5 billion share repurchase authorization. In another significant move, Jacobs reduced its outstanding debt by approximately $312 million through an equity for debt exchange involving its stake in Amentum Holdings, Inc. This transaction aligns with Jacobs’ strategy to become a leading science-based consulting and advisory company.

Furthermore, Jacobs secured a $13.4 million operational technology cybersecurity contract with the Hampton Roads Sanitation District to enhance the security of its industrial control systems. Additionally, the company has been selected to support the Boise Airport’s multi-year capital expansion plan, which includes constructing a new concourse and renovating existing facilities to manage increased passenger traffic. Jacobs also plays a pivotal role in developing a utility-scale quantum computer in Brisbane, Australia, as part of a project with PsiQuantum. These developments reflect Jacobs’ ongoing efforts to strengthen its position across various sectors and deliver value to its stakeholders.

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