On Tuesday, Goldman Sachs resumed coverage on Jacobs Engineering Group Inc. (NYSE:J) with a Neutral rating and a price target of $150.00. The firm highlighted a potential 9% upside to the stock based on this target.
According to InvestingPro data, analyst targets range from $124 to $176, with the current consensus suggesting a 12% upside potential. The re-initiation of coverage follows previous reports from October 2021 and May 2023, where Goldman Sachs had identified significant value in Jacobs' diverse business segments, particularly its Critical Mission Solutions division.
Following the decision to spin off the Critical Mission Solutions business, Jacobs Engineering's stock has seen a substantial return of approximately 37%. With a current market capitalization of $17.1 billion, the stock trades at a P/E ratio of 21.5x and an EV/EBITDA multiple of 15.25x, up from around 11.5x at the time of the spinoff announcement.
InvestingPro's comprehensive analysis indicates the stock is currently trading near its Fair Value, with multiple financial metrics and additional insights available through the platform's detailed Pro Research Report.
Goldman Sachs acknowledged Jacobs Engineering's strong market position and prospects for robust growth, driven by its Water and Environmental segments. However, the firm noted that this optimistic outlook is now widely shared, which has contributed to the stock's revaluation and led to the Neutral rating.
The focus for Jacobs as an independent entity is expected to be on margin improvement. Analysts anticipate that the company's February analyst day will provide insights into whether Jacobs can enhance its margins towards the 17% benchmark, which is considered best in class, from the current 14%.
In other recent news, Jacobs Engineering Group Inc. has reported a strong financial performance with a 22.5% year-over-year backlog growth to $21.8 billion, despite fourth-quarter earnings of $1.37 per share and revenue of $3 billion falling short of analyst estimates. The company's fiscal 2025 guidance estimates adjusted earnings per share to be between $5.80 and $6.20, expecting mid-to-high single digit revenue growth and an adjusted EBITDA margin of 13.8% to 14%.
RBC Capital has maintained an Outperform rating for Jacobs Engineering, with a revised price target of $152, reflecting confidence in the company's growth potential. Similarly, Baird increased the company's price target from $147 to $149, maintaining an Outperform rating due to positive first quarter performance.
On the other hand, KeyBanc continues to assign a Sector Weight rating to the company. These assessments from RBC Capital, Baird, and KeyBanc are based on the company's recent financial performance and future prospects.
Jacobs Engineering has also been involved in significant projects, partnering with AECOM to design an upgrade for the Iona Island Wastewater Treatment Plant in Vancouver. This project is expected to serve nearly one million residents by 2051.
In addition, the company has completed the spinoff of its CMS business to Amentum, a move that is expected to enhance operational efficiency.
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