On Tuesday, Stifel updated its outlook on KBR, Inc. (NYSE:KBR), increasing the stock price target to $80 from the previous $78, while retaining a Buy rating for the stock. The revision follows a webinar hosted by KBR in the morning, focusing on its Sustainable Technology Solutions (STS) business. The firm anticipates that STS will surpass $400 million in EBITDA by 2025.
KBR's STS segment is gaining prominence in the company's growth strategy. According to the analyst, while the webinar did not fully clarify the sales drivers, portfolio makeup, comparison groups, and business cyclicality, it was a positive move towards enhancing the visibility of the STS division.
The financial model for KBR has been updated by Stifel to reflect a higher EBITDA forecast for STS in 2025. The revision comes after acknowledging that their initial estimate was below the midpoint of KBR's projected compound annual growth rate (CAGR) of 20-25% for EBITDA between 2022 and 2025. The update from KBR is seen as a supportive nod to the STS business's potential over the next five years.
Stifel reaffirms its Buy recommendation for KBR shares, citing the company's latest briefing as a basis for the increased price target. The firm also noted that further insights are expected following an in-person non-deal roadshow (NDR) with KBR's management scheduled for the subsequent days.
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