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Tuesday, Science Applications International Corp. (NASDAQ:SAIC), a $5.4 billion market cap technology services provider, saw its price target increased by UBS to $126.00, up from the previous $123.00, while the firm maintained a Neutral stock rating. According to InvestingPro data, the company has demonstrated consistent profitability and maintains a relatively low beta of 0.65, indicating lower volatility compared to the broader market. UBS analyst Gavin Parsons (NYSE:PSN) noted the Government IT sector is not completely risk-free yet, but the situation is showing signs of stabilization.
Science Applications International Corp., a company that provides services to the U.S. government, has been navigating a period of uncertainty with its government customer. With annual revenue of $7.48 billion and analysts forecasting EPS of $8.98 for FY2026, the company has communicated a cautiously optimistic outlook, suggesting an improving volatility and a more stable customer environment. The analyst pointed out that while there are still risks related to revenue, specific contracts, non-traditional competition, and changes in contract terms, the path to less disruption is becoming more visible. InvestingPro subscribers can access 8 additional key insights about SAIC’s financial health and growth prospects.
The transition of the U.S. administration and the Department of Defense’s Global Positioning System (DOGE) has had some effect on the timing of awards for SAIC, but the overall impact has been limited. The company’s forward-looking statements indicate a belief in the possibility of achieving a 1.2X book-to-bill ratio in the first half of fiscal year 2026, based on bids already submitted. This ratio, which has been 0.9X over the past two years, could support a move to mid-single-digit organic growth in fiscal year 2027.
Despite these positive indicators, UBS remains neutral on SAIC stock due to the uncertainties surrounding recompetes and the conversion of the company’s pipeline into growth. Trading at a P/E ratio of 15.32x, InvestingPro analysis suggests the stock is slightly undervalued based on its Fair Value model. The analyst’s updated target reflects a modest shift in perspective, suggesting that the potential downside risks previously associated with SAIC may be less severe than what the market has been pricing in for the Government IT sector. For a comprehensive analysis of SAIC and other government contractors, investors can access detailed Pro Research Reports covering 1,400+ top stocks on InvestingPro.
In other recent news, Science Applications International Corp (SAIC) reported strong fourth-quarter earnings for fiscal year 2025, significantly exceeding analyst expectations. The company achieved an earnings per share (EPS) of $2.57, surpassing the projected $2.08, and recorded revenue of $1.84 billion, which was above the anticipated $1.81 billion. SAIC has provided positive guidance for fiscal year 2026, with projected revenue growth and an expected EBITDA margin of 9.4% to 9.6%. The company anticipates adjusted EPS to range between $9.10 and $9.30. Additionally, SAIC has won a significant $1.8 billion System Software (ETR:SOWGn) Lifecycle Engineering contract, bolstering its backlog and future revenue visibility. The company is also focusing on converting some contract types to fixed price, which could potentially improve margins. Analyst firm Cantor Fitzgerald engaged with SAIC regarding their book-to-bill ratio and future contract opportunities, indicating a stable outlook for the company. These developments reflect SAIC’s strategic focus on innovation and technology integration.
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