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On Friday, Truist Securities expressed continued confidence in KBR, Inc. (NYSE:KBR), maintaining a Buy rating and a $70.00 price target on the company’s stock, representing significant upside from the current price of $50.04. The firm’s analysts highlighted KBR as their preferred government services company, noting that 35% of its EBITDA comes from U.S. federal spending. The analysts underscored the company’s growth potential, with international government services and Sustainable Technology Solutions (STS) contributing to 65% of the EBITDA. According to InvestingPro data, the stock is currently trading near its 52-week low, while analysts maintain a strong buy consensus with price targets ranging from $64 to $80.
During a non-deal roadshow (NDR) in Boston, KBR’s CFO Mark Sopp and VP IR Jamie DuBray provided insights into the company’s financial health and business strategy. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score, with strong revenue growth of 11.3% over the last twelve months and an EBITDA of $662 million. Truist Securities took this opportunity to update their model to correct a previously published error in their earnings recap dated February 24, 2025.
KBR’s business mix was described as favorable, especially in light of uncertainties surrounding the Department of Defense’s Global Ecosystem Dynamics Geo (DOGE) program. The company’s 2024 EBITDA, with only around 35% coming from the U.S. Federal Government, showcases a diversified revenue stream. Management pointed out that international government work offers the highest margins, ranging between 12%-15%, surpassing the 8%-9% margins associated with U.S. government contracts.
The company’s domestic operations are also performing well, with Military and Intelligence Space segments yielding the highest margins, followed by Readiness & Sustainment. KBR disclosed that its NASA contracts generate approximately $800 million in revenue with a 6% margin, which implies around 9% of the Mission Technology Solutions (MTS) EBITDA.
In the area of STS, KBR is expected to continue benefiting from growth in the ammonia market, as well as from its involvement with Mura plants, which are part of the company’s sustainable technology initiatives. Based on InvestingPro’s Fair Value analysis, KBR appears undervalued at current levels, with additional upside potential supported by its consistent dividend growth of 22.22% and strong return on equity of 26%. For deeper insights into KBR’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, KBR Inc . reported impressive financial results for the fourth quarter of 2024, surpassing analysts’ expectations for both earnings and revenue. The company achieved an earnings per share (EPS) of $0.91, exceeding the forecast of $0.82, and reported revenues of $2.12 billion, which topped the anticipated $2.01 billion. For the full year, KBR’s revenue reached $7.7 billion, marking an 11% increase from the previous year. Looking ahead, KBR has provided optimistic guidance for 2025, projecting revenue between $8.7 billion and $9.1 billion, indicating a 15% growth at the midpoint.
Additionally, KeyBanc Capital Markets adjusted its price target for KBR, reducing it from $70.00 to $67.00 while maintaining an Overweight rating on the shares. Analyst Sangita Jain from KeyBanc highlighted KBR’s strong finish in the fourth quarter and a detailed outlook for 2025, considering uncertainties surrounding the DOGE program and defense priorities. Despite the reduction in the price target, KeyBanc views the current share price as an opportunity for investors.
Furthermore, KBR plans to engage in opportunistic share buybacks, utilizing the newly authorized $750 million share repurchase program. This move is seen as a sensible use of the company’s balance sheet, especially in light of the recent sell-off in its shares. These developments reflect confidence in KBR’s long-term value and financial strategy.
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