On Wednesday, Truist Securities revealed its top picks for potential growth in the Business & Government Services sector by 2025. The firm's analyst, Tobey Sommer, provided a bullish outlook on select companies, citing various factors that could drive their growth in the coming years.
Robert Half International (NYSE:RHI) was named as the top human capital firm, with an expectation of positive revenue growth beginning in the third quarter of 2025. This forecast is based on increased confidence among small to medium-sized business customers, as indicated by historical trends in the NFIB's Index during different presidential administrations. RHI is also anticipated to benefit from a resurgence in capital markets through its subsidiary Protiviti, which specializes in transaction integration and compliance services.
FTI Consulting (NYSE:NYSE:FCN) was recognized for its organic growth and status as a destination employer. Truist projects that FTI will experience significant growth in sales and EBITDA over the next decade, driven by billable headcount, bill rate growth, general and administrative leverage, and share repurchase. The firm also expects FTI to adapt successfully to changes in regulatory policy under a potential Trump administration, which could result in increased M&A activity.
KBR (NYSE:KBR) is seen as having an attractive risk-reward setup, with Truist setting a price target of $70, indicating approximately 18% upside potential. According to InvestingPro data, analysts are highly bullish on KBR, with price targets ranging from $64 to $84, suggesting significant upside potential. The company, which generated $7.35 billion in revenue over the last twelve months and maintains a solid financial health score, is currently trading below its Fair Value. The company's positioning is considered favorable in light of potential policy shifts from the Department of Government Efficiency.
KBR's Sustainable Technology Solutions segment, in particular, is expected to thrive under a Trump administration, with new LNG export licenses likely to drive growth. The company has demonstrated consistent financial strength, maintaining dividend payments for 17 consecutive years and achieving a 7.55% revenue growth in the last twelve months.
InvestingPro subscribers can access 8 additional key insights about KBR's growth potential and financial health metrics through the comprehensive Pro Research Report, which provides detailed analysis of the company's performance and outlook.
Republic Services (NYSE:NYSE:RSG) received a bullish outlook from Truist due to anticipated pricing-led growth and a healthy price-cost spread in the Environmental Services sector. The firm predicts that RSG will outperform peers due to its limited exposure to volatile pricing, lower leverage, and potential for margin improvement through strategic acquisitions.
Clean Harbors (NYSE:NYSE:CLH), the leader in hazardous waste and motor oil re-refining, is also expected to see an upside to estimates in 2025. Truist believes the risks associated with weak base oil pricing have been mitigated and that new incineration capacity brought online by CLH and Veolia will support volume growth and pricing gains. Moreover, recent M&A transactions in the sector suggest potential for multiple expansion for CLH.
Truist's selections for 'Best Ideas For 2025' reflect a strategic focus on companies poised to benefit from market conditions, regulatory changes, and sector-specific trends. For KBR specifically, InvestingPro analysis reveals strong fundamentals with a P/E ratio of 24.49x and positive earnings expectations for the coming year. The firm's analysis suggests these companies could offer significant growth opportunities for investors over the next few years.
Investors seeking deeper insights into KBR and similar opportunities can access detailed financial metrics, Fair Value calculations, and expert analysis through InvestingPro's comprehensive research platform.
In other recent news, government services companies CACI, Parsons (NYSE:PSN), Leidos Holdings (NYSE:LDOS), and Booz Allen (NYSE:BAH) Hamilton saw a surge in their stocks as Elon Musk expressed doubt over achieving $2 trillion in cuts to the US federal budget.
Despite this, Musk remained hopeful about achieving $1 trillion in cuts. Significant changes have also been announced at KBR Inc (NYSE:KBR). The company has unveiled organizational updates and executive appointments, including Byron Bright as the new Chief Operating Officer, and has reaffirmed its financial targets for 2027.
The company also announced the retirement of board members General Lester L. Lyles and Mark E. Baldwin, reducing the board size from eleven to ten members. KBR's 2024 revenue guidance was raised to $7.5 billion-$7.7 billion, and adjusted EBITDA to $840 million-$870 million, following a 10% year-on-year increase in group revenue and an 18% rise in adjusted EBITDA.
In other developments, activist investor Irenic Capital Management has acquired a stake in KBR, advocating for the separation of its private sector segment, which could potentially increase shareholder value by up to 50%. DA Davidson maintained a Buy rating on KBR's shares and raised the price target to $84.00 from $78.00.
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