On Friday, DA Davidson maintained a Buy rating on KBR, Inc. (NYSE:KBR) shares and increased the price target to $84.00, up from the previous $78.00. The firm's decision follows an evaluation of the company's financial prospects, considering the anticipated contributions from the LinQuest business and growth opportunities.
The analyst from DA Davidson expressed optimism about KBR's future, citing advances the company has made despite some delays in revenue contributions from its HomeSafe program. Although the revenue delays were anticipated and considered nominal for 2024, the company's strategic moves, such as cross-country relocations and the addition of new vendors, were highlighted as positive developments.
KBR's prospects for revenue growth above 10% paired with a similar trajectory for EBITDA (earnings before interest, taxes, depreciation, and amortization) were emphasized as reasons for the maintained Buy rating. The analyst applied a 13 times multiple to the projected 2025 EBITDA and a 12 times multiple to the 2026 EBITDA estimates, incorporating the expected contributions from LinQuest.
The firm noted that KBR's HomeSafe program progression, along with its pursuits in the LNG (liquefied natural gas) sector and opportunities for government services (GS) awards, are anticipated to serve as catalysts for the company's growth.
KBR, Inc., known for its work in the engineering, procurement, and construction sectors, has been expanding its range of services and is poised to capitalize on various market opportunities according to DA Davidson's analysis. The new price target of $84 reflects the firm's confidence in KBR's strategic initiatives and their potential to enhance the company's financial performance.
In other recent news, KBR Inc . reported a substantial financial performance in its third quarter of 2024 earnings call. The global engineering, construction, and services company highlighted a 10% year-on-year increase in group revenue and an 18% rise in adjusted EBITDA.
The company's sustainability efforts contributed to over $2.5 billion in revenue, with significant project wins such as contracts for Aramco (TADAWUL:2222)'s liquid to chemicals project and various LNG contracts.
KBR's acquisition of LinQuest enhanced its military space capabilities, contributing to over $60 million in new orders. Despite challenges, such as labor shortages due to Brexit and potential uncertainties related to U.S. election outcomes, KBR remains confident in its strategic positioning, particularly in the Middle East.
The company has raised its 2024 revenue guidance to $7.5 billion-$7.7 billion and adjusted EBITDA to $840 million-$870 million. KBR is making progress in emerging technologies like sustainable aviation fuel and plastics recycling, and is confident in achieving 11% to 15% growth expectations for its STS segment in the upcoming year. These are recent developments that emphasize KBR's robust growth and strategic positioning.
InvestingPro Insights
KBR's financial metrics and market performance align well with DA Davidson's optimistic outlook. According to InvestingPro data, KBR's revenue growth stands at 7.55% over the last twelve months, with quarterly revenue growth reaching 10% in Q3 2024. This supports the analyst's projection of revenue growth above 10%. Additionally, the company's EBITDA growth of 14.72% in the same period reinforces the expectation of strong EBITDA trajectory.
InvestingPro Tips highlight that KBR has raised its dividend for 5 consecutive years and maintained payments for 17 years, indicating financial stability and commitment to shareholder returns. This consistency aligns with the company's strategic initiatives mentioned in the article. Moreover, the tip that net income is expected to grow this year corroborates DA Davidson's positive outlook on KBR's financial prospects.
For investors seeking a deeper understanding of KBR's potential, InvestingPro offers 11 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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