Citi has adjusted its price target for Jacobs (J, Financial), reducing it from $161 to $151, while maintaining a Buy rating on the stock. The financial institution's analysis anticipates that the company's first-quarter results will either align with or surpass Wall Street projections. However, there is caution regarding future outlooks, as potential economic deceleration might impact project activities.
In a report to investors, Citi emphasized that rising input costs due to tariffs and broader economic uncertainties might prompt clients to reconsider their project and capital expenditure plans. Despite this, the firm continues to view Jacobs positively in their engineering and construction sector coverage.
In addition to Jacobs, Citi highlighted Quanta Services (PWR) as their favored stock pick in the sector, followed by MasTec (MTZ) and KBR (KBR). These companies are regarded as having strong prospects amidst the prevailing economic conditions.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for Jacobs Solutions Inc (J, Financial) is $148.07 with a high estimate of $176.00 and a low estimate of $123.00. The average target implies an upside of 21.04% from the current price of $122.33. More detailed estimate data can be found on the Jacobs Solutions Inc (J) Forecast page.
Based on the consensus recommendation from 18 brokerage firms, Jacobs Solutions Inc's (J, Financial) average brokerage recommendation is currently 2.2, 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 Jacobs Solutions Inc (J, Financial) in one year is $99.49, suggesting a downside of 18.67% from the current price of $122.33. 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 Jacobs Solutions Inc (J) Summary page.
J Key Business Developments
Release Date: February 04, 2025
- Total Gross Revenue: Increased over 4% in Q1.
- Adjusted Net Revenue: Rose over 5% year-over-year.
- GAAP EPS: Negative $0.10, impacted by a $1.16 loss from investment in Amentum.
- Adjusted EPS: $1.33, an 8% decrease compared to the previous year.
- Adjusted EBITDA: $282 million, a 24% year-on-year increase.
- Adjusted EBITDA Margin: 13.5%, increased by approximately 200 basis points year-over-year.
- Consolidated Backlog: Increased 19% year-over-year, totaling $21.8 billion.
- Book-to-Bill Ratio: 1.4x for Q1; trailing 12-month ratio at 1.3x.
- Free Cash Flow: $97 million for Q1.
- Share Repurchases: $202 million in Q1, with a new $1.5 billion authorization approved.
- Dividend: $0.32 per share, representing 10% year-over-year growth.
- Adjusted EPS Guidance: Raised to $5.85 to $6.20 for fiscal '25.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total gross revenue increased over 4% in Q1, with adjusted net revenue rising over 5%.
- Adjusted EBITDA for Q1 was $282 million, representing a 24% year-on-year increase.
- Consolidated backlog increased 19% year-over-year in Q1, with a trailing 12-month book-to-bill ratio of 1.3x.
- Significant contract wins in critical infrastructure, including the River Torrens to Darlington project in South Australia and the BusConnects Dublin program.
- Strong performance in the Water and Environmental segment, with double-digit revenue growth across all major geographies.
Negative Points
- GAAP EPS was negative $0.10, impacted by a $1.16 mark-to-market loss on investment in Amentum.
- Adjusted EPS decreased by 8% compared to the previous year, primarily due to an unfavorable tax comparison.
- Life sciences and advanced manufacturing segment showed mixed results, with life sciences strong but advanced manufacturing soft.
- Free cash flow for Q1 was $97 million, with a more back half-weighted cadence expected for the full year.
- Exposure to potential federal spending cuts, though less than 10% of business is tied to federal agencies.
