On Friday, Wells Fargo adjusted its outlook on Science Applications (NASDAQ: NASDAQ:SAIC), increasing the stock's price target to $157 from the previous $122 while keeping an Equal Weight rating. The revision follows Science Applications' stronger-than-anticipated second quarter performance and an increase in share repurchases.
The firm's analyst noted that the updated price target is derived from applying a 17.5x multiple to the anticipated earnings per share (EPS) for fiscal year 2026. This multiple aligns with Science Applications' current trading value based on the fiscal year 2025 EPS. The analyst also raised the EPS forecast for fiscal year 2025 to $8.12, up from $8.01, due to the recent quarter's earnings beat and the company's repurchase activity.
Furthermore, the forecast for fiscal year 2026 has been adjusted upward, reflecting the expectation that the 22% tax rate will persist, a slight decrease from the previously forecasted 23%. This adjustment takes into account both the tax rate and growth from an elevated fiscal year 2025 base.
The price target increase is a reflection of Science Applications' recent financial performance and the firm's expectations for continued growth. The analyst's comments indicate that the new valuation accounts for both the recent quarter's results and the anticipated benefits of share repurchases and a stable tax rate moving forward.
Science Applications' stock price target adjustment by Wells Fargo is based on the company's current market performance and expected future earnings, suggesting confidence in the company's financial trajectory through fiscal year 2026.
In other recent news, Science Applications International Corp (SAIC) has been the focus of various financial and strategic developments. The company has been upgraded from Neutral to Overweight by JPMorgan, which also raised its price target on SAIC shares to $170.00. This followed SAIC's successful shift towards higher-value work and an increase in submitted bids from $17 billion last year to $22 billion this year.
SAIC also secured a $229 million contract from the U.S. Department of Defense to enhance IT capabilities of NORAD and USNORTHCOM. Moreover, the company's second fiscal quarter results indicated a 2% increase in revenue and a slight 2% decrease in EBITDA, surpassing expectations and leading to a revised fiscal year 2025 forecast predicting 3% revenue growth and 4% EBITDA growth.
Analysts at Jefferies have also raised SAIC's stock target from $140.00 to $148.00, maintaining a hold rating. These recent developments are part of SAIC's strategic transition towards targeted growth areas and improved bidding processes. The company aims to hit a book-to-bill ratio of 1.2x by the first half of fiscal year 2026 and a 5% organic revenue growth by the end of the same fiscal year.
InvestingPro Insights
Science Applications International Corporation (SAIC) has been demonstrating strong financial performance, aligning with Wells Fargo's positive outlook. According to InvestingPro data, SAIC's market capitalization stands at $7.07 billion, with a P/E ratio of 25.88, indicating investor confidence in the company's earnings potential.
InvestingPro Tips highlight that SAIC has been aggressively buying back shares, which supports Wells Fargo's observation about increased share repurchases. This strategy often signals management's belief in the company's value and can potentially boost earnings per share. Additionally, SAIC has maintained dividend payments for 12 consecutive years, showcasing its commitment to shareholder returns.
The company's stock is currently trading near its 52-week high, with a strong return of 23.03% over the last three months. This performance corroborates Wells Fargo's decision to raise the price target. SAIC's revenue for the last twelve months as of Q2 2025 was $7.297 billion, with an operating income margin of 6.98%, reflecting the company's ability to generate profits from its operations.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for SAIC, providing a deeper understanding of the company's financial health and market position.
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