RBC lifts Amentum stock price target to $24 on FCF outlook

On Wednesday, RBC Capital Markets adjusted its financial outlook for Amentum Holdings Inc. (NYSE: AMTM), increasing the price target from $22.00 to $24.00 while maintaining a Sector Perform rating on the company’s shares. According to InvestingPro data, the company, currently valued at $5.3 billion, appears undervalued based on its Fair Value analysis. The revision follows a series of investor meetings led by the defense contractor’s top executives, focusing on the company’s free cash flow (FCF) and organic growth projections.

Amentum Holdings, represented by CEO John Heller, CFO Travis Johnson, and Head of Investor Relations Nathan Rutledge, engaged with investors to discuss the company’s financial strategies and future prospects. The meetings highlighted Amentum’s attractive FCF outlook and its strategy for reducing debt. InvestingPro data shows the company maintains a healthy current ratio of 1.56, indicating strong liquidity to meet short-term obligations.

Investors with a long-term perspective were particularly interested in the company’s FCF prospects, which are bolstered by Amentum’s clear path to de-leveraging. With current annual revenue of $11.26 billion and analysts expecting sales growth this year, attention was drawn to the expectations of organic growth in the second half of 2025 and the full fiscal year 2026. However, there were concerns regarding potential risks to the top-line revenue, stemming from the timing of contract awards and the possible impact of the Department of Defense’s budgetary decisions (referred to as DOGE in the context). For deeper insights into Amentum’s growth prospects and financial health, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

RBC Capital’s commentary underscored the belief that increasing confidence in Amentum’s FCF outlook could lead to an expansion of the company’s market multiples, though its current P/E ratio of 223 suggests high growth expectations are already priced in. This reflects an anticipation that improved sentiment towards the company’s financial health could positively influence its stock valuation.

Amentum Holdings Inc. specializes in providing technical and engineering services, primarily to governmental agencies. The company’s financial performance and growth potential are closely watched by investors, especially given the competitive and often cyclical nature of defense contracting. The updated price target suggests that RBC Capital sees a favorable financial trajectory for Amentum, despite the challenges and uncertainties inherent in the sector.

In other recent news, Amentum Holdings Inc. reported its second-quarter 2025 earnings, with earnings per share (EPS) of $0.53, significantly surpassing the forecasted $0.26. The company’s revenue for the quarter reached $3.5 billion, marking a 1% growth year-over-year. Despite the strong earnings performance, Amentum’s stock experienced a decline in after-hours trading. Additionally, Amentum announced the divestiture of its Rapid Solutions business, expected to generate $325 million after-tax, aligning with its strategy to streamline operations and focus on core strengths.

Citizens JMP recently set a price target of $30 on Amentum’s stock, rating it as Market Outperform. This reflects confidence in the company’s market position and future prospects. Amentum’s financial outlook includes a full-year revenue guidance of $13.85-$14.15 billion and adjusted EBITDA guidance of $1.065-$1.095 billion. The firm aims to achieve a 3% revenue growth in the second half of the fiscal year and reduce net operating leverage to 3x by FY2026.

Amentum’s strategic initiatives include reducing net leverage from 4.1x to 4x and focusing on mission-focused solutions, particularly in nuclear engineering and space sectors. The company remains confident in its ability to navigate market dynamics and capitalize on growth opportunities, supported by its diverse client base and strong financial performance.

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