KeyBanc has reduced its rating for KBR (KBR, Financial) from Overweight to Sector Weight after the U.S. Department of Defense officially ended the company's HomeSafe program last week. This decision was made without setting a new price target. According to the firm, investors needed a strong foundation to reassess KBR's value long-term, but the present market sentiment discourages investments when future prospects are uncertain, despite the stock's attractive price.
KeyBanc has also trimmed its financial projections for KBR but remains wary of potential further downward adjustments due to ongoing uncertainties. This uncertainty was a key factor in the downgrade decision. The firm emphasizes the need for clearer long-term stability to restore investor confidence in KBR's valuation.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 8 analysts, the average target price for KBR Inc (KBR, Financial) is $66.38 with a high estimate of $78.00 and a low estimate of $55.00. The average target implies an upside of 36.67% from the current price of $48.57. More detailed estimate data can be found on the KBR Inc (KBR) Forecast page.
Based on the consensus recommendation from 8 brokerage firms, KBR Inc's (KBR, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for KBR Inc (KBR, Financial) in one year is $78.41, suggesting a upside of 61.45% from the current price of $48.565. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the KBR Inc (KBR) Summary page.
KBR Key Business Developments
Release Date: May 06, 2025
- Revenue: $2.1 billion, up 13% year-over-year.
- Adjusted EBITDA: $243 million, up 17% year-over-year.
- Adjusted EBITDA Margin: 11.8%, an increase of 40 basis points year-over-year.
- Adjusted EPS: $0.98, up 27% year-over-year.
- Operating Cash Flow: $98 million, up 8% year-over-year.
- MTS Revenue: $1.5 billion, up 14% year-over-year.
- STS Revenue: $550 million, up 12% year-over-year.
- STS EBITDA Margin: 22.5%, up 160 basis points year-over-year.
- Share Buybacks: Exceeded $150 million in the quarter.
- Net Leverage: 2.6 times.
- Backlog and Options: Over $20 billion.
- Book-to-Bill Ratio: 1.1 times trailing twelve months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KBR Inc (KBR, Financial) delivered strong financial performance in Q1 2025 with revenues of $2.1 billion and adjusted EBITDA of $243 million, both showing double-digit growth.
- The company achieved an adjusted EBITDA margin of 11.8%, up 40 basis points year-on-year, indicating improved operational efficiency.
- KBR Inc (KBR) successfully executed its growth strategy, with significant contributions from the LinQuest acquisition and increased bid volumes.
- The company maintained a strong balance sheet and returned record levels of capital to shareholders through share repurchases and dividends.
- KBR Inc (KBR) reaffirmed its financial outlook for 2025, demonstrating confidence in its strategic direction and market positioning.
Negative Points
- The HomeSafe contract ramp-up is expected to be modest in Q2, with incremental growth anticipated in Q3 and Q4, indicating potential delays in revenue realization.
- There is ongoing uncertainty regarding the level of troop support in Eastern Europe, which could impact revenue from government contracts.
- The company faces risks from potential changes in customer behavior due to tariffs and government efficiency initiatives, although no significant impacts have been observed yet.
- KBR Inc (KBR) has $2 billion in awards under protest, reflecting a trend of government contract protests that could delay project execution.
- The company is exposed to macroeconomic uncertainties, although it believes its diversified global mix of business positions it well to navigate these challenges.
