On Monday, Truist Securities adjusted its outlook on Science Applications (NASDAQ:SAIC) International Corp (NASDAQ:SAIC), reducing the price target to $125 from the previous $130, while retaining a Hold rating on the stock. The firm's analysis suggests that Science Applications' shares fell sharply today, marking a 12% decline amidst a generally positive investor sentiment following a recent investor day event.
The change in the price target comes after Science Applications provided what Truist Securities perceives as a disappointing second-quarter fiscal year 2025 (F2Q25) guide. Additionally, the maintained guidance implies a notably aggressive ramp-up in the second half of the fiscal year, which seems to have contributed to the stock's underperformance.
The analyst pointed out that the company's EBITDA margins shrank by approximately 30 basis points during the quarter. This margin contraction is attributed to Science Applications' focus on internal investments and challenges related to the timing of project milestones.
Truist Securities' commentary underscores a cautious outlook on the company's near-term performance. The firm indicates that the path for Science Applications to close the performance gap with its peers may take longer than some optimistic investors expect. This tempered expectation is reflected in the revised price target and the ongoing Hold rating on the company's shares.
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