Parsons stock initiated with Buy rating at UBS on growth acceleration

Investing.com - Parsons Corp. (NYSE:PSN) received a Buy rating from UBS as the investment bank initiated coverage on the company with a $107.00 price target on Wednesday, representing a 29.5% upside from the current price of $82.62. According to InvestingPro data, analysts maintain a consensus "Buy" recommendation with price targets ranging from $83 to $100.

UBS analyst Gavin Parsons cited expectations for accelerating growth in the company’s Federal Solutions segment, supported by strong bookings and a technology-focused acquisition strategy that should drive overall company growth and margin expansion in both business segments. This growth strategy is particularly important as Parsons operates with a moderate debt level (Debt/Equity ratio of 0.54) while maintaining strong liquidity with current assets exceeding short-term obligations.

The investment bank projects 6% upside to consensus EBITDA next year and 7% in 2027, with above peer-average growth supporting a premium valuation for the stock. This premium valuation is reflected in Parsons’ current P/E ratio of 38.06 and PEG ratio of 5.23, which InvestingPro identifies as high relative to near-term earnings growth. The company’s market capitalization currently stands at $8.8 billion.

UBS Evidence Lab data indicates approximately 65% Department of Defense mix within the Federal Solutions segment and high implied Intelligence exposure, both representing fast-growing budget areas that position Parsons favorably.

These premium exposures are expected to drive 10% average core organic growth for Parsons between 2026-2028, compared to the 5% peer average, with additional upside potential from major growth initiatives like Golden Dome and FAA modernization.

In other recent news, Parsons Corporation reported its third-quarter 2025 earnings, showcasing a mixed performance. The company achieved an earnings per share (EPS) of $0.86, exceeding analyst expectations of $0.75, representing a 14.67% positive surprise. However, Parsons’ revenue for the quarter was $1.62 billion, which fell short of the anticipated $1.67 billion. In addition to its earnings report, Parsons secured a significant position on a $15 billion Pacific Deterrence Initiative Multiple Award Construction Contract from the Naval Facilities Engineering Systems Command. This contract allows Parsons to compete for substantial projects, including infrastructure and energy storage solutions. Furthermore, Parsons has been awarded a five-year contract to modernize the U.S. Coast Guard’s Biometrics at Sea System, enhancing maritime law enforcement capabilities. These developments highlight Parsons’ ongoing engagement in major defense and security projects.

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