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On Thursday, Truist Securities adjusted its outlook on Parsons Corp . (NYSE:PSN), reducing the price target from the previous $110.00 to $85.00, while continuing to recommend the stock as a Buy. The alteration follows Parsons Corp.’s recent disclosure of fourth-quarter earnings and the release of its 2025 guidance, which did not meet market expectations. The stock, currently trading at $65.08, has experienced significant pressure, falling over 11% in the past week and trading near its 52-week low. According to InvestingPro analysis, the stock’s RSI suggests it may be oversold.
The reevaluation by Truist Securities arrives after Parsons reported what was termed a "noisy quarter," yet the firm’s analysts still see a strong long-term growth trajectory for the company. Despite the lowered guidance, Truist Securities believes in Parsons’ solid positioning in relation to the Department of Defense, with approximately 56% of its business tied to federal spending. InvestingPro data shows the company maintains strong fundamentals, with a 24% revenue growth in the last twelve months and a "GOOD" overall financial health score. Get access to 10+ additional exclusive ProTips and comprehensive analysis through InvestingPro’s detailed research reports.
The lowered price target reflects concerns over potential risks if a certain halted program connected to a confidential contract does not resume. Additionally, the Department of Defense has paused two contracts that, while not material to Parsons’ overall business, have contributed to a more cautious outlook.
Truist Securities’ analysts remain optimistic about Parsons’ future, citing the company’s potential for sustained growth that outpaces the industry average. They also anticipate that Parsons’ growth prospects, combined with expected margin expansion, justify a premium valuation compared to its peers.
The adjustment in the price target to $85.00 is also attributed to lower valuation multiples observed across the group. Truist Securities reaffirms its confidence in Parsons Corp., highlighting the company’s strategic position and growth potential despite the recent challenges reflected in the market’s response to the company’s updates.
In other recent news, Parsons Corporation reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.78, which did not meet the forecasted $0.91. The company’s revenue also fell short, coming in at $1.73 billion against an anticipated $1.76 billion. Despite these results, Parsons achieved full-year revenue exceeding $6.7 billion for the first time, with significant growth in adjusted EBITDA and contract awards. Looking ahead, Parsons has set a revenue guidance of $7.0-$7.5 billion for 2025, with a 5% organic growth target and expectations for continued margin expansion.
In other developments, KeyBanc Capital Markets adjusted its outlook on Parsons by reducing the company’s price target from $102.00 to $76.00 while maintaining an Overweight rating. This decision followed Parsons’ lower than anticipated adjusted EBITDA for the fourth quarter of 2024 and a 2025 guidance that did not meet expectations. The analysts attributed the results to legacy construction charges and a normalization of activities on a confidential contract.
Parsons also plans to continue its acquisition strategy in 2025, with expectations for 2-3 new acquisitions. The company recently acquired TRS Group to enhance its environmental remediation capabilities, particularly in PFAS remediation. These recent developments reflect a dynamic period for Parsons as it navigates financial challenges and strategic opportunities.
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