On Wednesday, TD Cowen analysts downgraded Science Applications (NASDAQ:SAIC) International Corporation (NASDAQ:SAIC) stock rating from Buy to Hold and significantly reduced their price target to $120 from $155. The new target is based on an 11.3x calendar year 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple. This adjustment reflects concerns about the company's performance and sector sentiment.
Science Applications, a company focused on providing scientific, engineering, and IT solutions, is considered a turnaround case with organic growth trailing behind its peers. The analysts highlighted that the current market sentiment towards the sector is negative and is unlikely to improve in the near future, especially as the Trump Administration has not yet taken office.
The firm expressed a preference for companies within the sector that demonstrate stronger organic growth, such as CACI International Inc (NYSE:CACI) and Booz Allen (NYSE:BAH) Hamilton Holding Corporation, despite the differences in their valuations. The analysts' comments suggest that while Science Applications may have value, there are currently more compelling growth stories in the market.
The downgrade and price target reduction come at a time when investors are cautious about the sector's prospects. The analysts' decision to adjust their stance on Science Applications stock reflects a strategic shift based on the company's growth metrics compared to its competitors and the broader industry challenges.
The revised price target of $120 represents a more conservative valuation of Science Applications, taking into account the company's slower organic growth and the overall negative sentiment that is affecting the sector. Investors and market watchers will be monitoring the company's performance closely to see if it can overcome the challenges identified by TD Cowen analysts and achieve a turnaround.
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