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Parsons Corporation (NYSE:PSN) announced a revision to its 2025 financial guidance in light of recent changes in a confidential contract with the Department of State. This adjustment was disclosed in a filing with the Securities and Exchange Commission. The announcement comes as the company’s stock has declined over 32% in the past six months, while maintaining a "GOOD" overall financial health score according to InvestingPro analysis.
The company stated that due to a reorganization by the Department of State on May 29, 2025, there is increased uncertainty surrounding the contract. As a result, Parsons has removed the anticipated financial impact of this contract from its 2025 projections for periods after June 2025. The company indicated that it is currently unable to estimate the potential size or scope of work related to this contract after this date. Notably, InvestingPro data shows that 8 analysts have recently revised their earnings expectations downward, suggesting broader concerns about near-term performance.
The updated guidance reflects a decrease in expected total revenue for 2025. Parsons now anticipates total revenue to be between $6.45 billion and $6.65 billion, down from the prior estimate of $7 billion to $7.5 billion. Excluding the confidential contract, total revenue is projected to range from $6.165 billion to $6.365 billion, compared to the previous forecast of $6.25 billion to $6.45 billion. For context, the company’s current revenue stands at $6.77 billion, with a healthy gross profit margin of 21.2%. According to InvestingPro’s Fair Value analysis, the stock appears to be currently undervalued, with additional insights available in the comprehensive Pro Research Report.
Adjusted EBITDA, including non-controlling interest, is now expected to be between $590 million and $630 million, reduced from the earlier guidance of $640 million to $710 million. The adjusted EBITDA margin remains unchanged at 9.1% to 9.5%.
Cash flow from operating activities is forecasted to be between $380 million and $420 million, a decrease from the prior range of $420 million to $480 million.
The company noted that it is not providing net income guidance due to volatility related to interest, taxes, depreciation, amortization, and other factors affecting net income.
This information is based on a press release statement from Parsons Corporation, as filed with the SEC.
In other recent news, Parsons Corporation has been awarded significant contracts for the development of King Salman International Airport in Riyadh, Saudi Arabia. The contracts, which span four years, involve Parsons overseeing both airfield assets and landside infrastructure. This development is part of a broader expansion for the company in the region. Meanwhile, Parsons has also secured 30 projects in Qatar, valued at up to $97 billion, contributing to its growth and supporting American employment in the engineering sector.
However, Parsons faces challenges as Jefferies downgraded its stock rating from Buy to Hold, lowering the price target to $65 due to a 2% organic revenue contraction in the first quarter. Baird also adjusted its rating from Outperform to Neutral, citing risks associated with a $725 million annual revenue contract under review by the Trump administration. This contract is crucial to Parsons’ Federal business segment and is set to expire in February, creating potential revenue uncertainties. Despite these challenges, analysts note Parsons’ competitive edge in its Federal and Infrastructure segments, although they caution about potential downward risks in the Federal segment’s guidance.
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