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On Wednesday, Raymond (NSE:RYMD) James confirmed its Outperform rating on Amentum Holdings Inc. (NYSE:AMTM) with a steady price target of $30.00. The stock currently trades at $22.71, with analysts’ targets ranging from $24 to $31, according to InvestingPro data. The firm’s analysts highlighted Amentum’s strong start to fiscal year 2025, noting its robust results and solid business development, with a book-to-bill ratio of 1.1x. Despite anticipating a roughly 1% headwind from potential administrative changes, the company’s guidance remained unchanged.
Amentum Holdings reported a top-line revenue that exceeded expectations by 2%, with actual figures reaching $3.4 billion against the projected $3.3 billion. The margin also slightly surpassed estimates, coming in at 7.7% compared to the street’s expectation of 7.6%. Additionally, Amentum’s adjusted EBITDA beat forecasts by 3.1%, with reported figures of $262 million versus the anticipated $254 million. InvestingPro analysis reveals the company’s strong liquidity position with a current ratio of 1.59, though it currently faces challenges with weak gross profit margins of 10.27%.
Looking forward, Raymond James analysts foresee low single to mid-single digit organic growth, margin expansion, and a clear path for Amentum to reduce its debt from approximately 4 times to less than 3 times within 24 months. Based on InvestingPro Fair Value analysis, the stock appears undervalued at current levels, with additional ProTips highlighting expected net income growth and sales expansion in the current year. The firm’s model for Amentum remains largely unchanged but leans towards higher revenue and EBITDA projections for fiscal years 2025 and 2026. The forecasts are based on organic growth of 1.3% and 3.8%, respectively, with EBITDA margins expected to be 7.8% and 7.9%.
The analysts expressed optimism that Amentum’s stock is poised to reach the $30.00 price target over the next 12 months. This confidence is based on the company’s continued execution, recognition of its top-class visibility, increasing investor knowledge and awareness, and the full appreciation of the impact from debt reduction. Amentum’s stock has reacted positively to the news, signaling market approval of the company’s performance and outlook.
In other recent news, Amentum Holdings Inc. reported favorable first-quarter 2025 results, maintaining the company’s positive trajectory since going public. Truist Securities sustained its optimistic stance on Amentum, reiterating a $31 target for the stock, based on a 10.2 times multiple of the firm’s estimated EBITDA for 2025. The firm’s analysts also highlighted Amentum’s potential for better performance due to new government initiatives and its foray into new areas of work.
Meanwhile, Amentum granted its CEO, John Heller, 1,373,955 stock options and 155,938 restricted stock units (RSUs) as part of a significant equity award. The stock options have an exercise price of $22.71 and will expire on the fourth anniversary of the grant date. Both the options and RSUs are scheduled to vest over three years.
On the other hand, RBC Capital Markets initiated coverage on shares of Amentum with a Sector Perform rating and a price target of $24.00. The company’s strong free cash flow, substantial backlog, and exposure to growth markets were noted as strengths. However, forecasted growth for fiscal year 2025 is considered below that of peer companies, and uncertainties surrounding the federal budget and potential policy changes were identified as potential challenges.
In another development, Amentum appointed Jennifer Walsmith as President of its Intelligence & Cybersecurity business. Walsmith, with over three decades of experience, will oversee the company’s efforts in delivering national security, intelligence, and cybersecurity services to U.S. intelligence and defense customers.
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