Citi has adjusted its price target for KBR (KBR, Financial) to $69, down from the previous $77, while maintaining a Buy rating on the engineering and construction company's shares. Analysts at Citi anticipate that KBR's first-quarter results, along with those of other firms in the sector, will likely meet or surpass Wall Street expectations. However, there is a cautionary note regarding the guidance from company managements, which may indicate rising uncertainty in project activities due to the potential economic slowdown.
Citi analysts have highlighted that higher input costs, exacerbated by tariffs and economic instability, could prompt clients to reassess their project plans and capital expenditures. This evaluation could affect future growth prospects for firms in the sector.
Despite this cautious outlook, Quanta Services (PWR) remains Citi’s top recommendation within the industry, followed closely by MasTec (MTZ) and KBR (KBR, Financial).
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 $67.38 with a high estimate of $78.00 and a low estimate of $55.00. The average target implies an upside of 25.93% from the current price of $53.50. 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 1.8, 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 $78.35, suggesting a upside of 46.45% from the current price of $53.5. 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: February 24, 2025
- Revenue: $2.1 billion in Q4; $7.7 billion for FY 2024, representing 23% growth for the quarter and 11% for the year.
- Adjusted EBITDA: $228 million in Q4; $870 million for FY 2024, with a margin of 11.2%, up 50 basis points year over year.
- Adjusted EPS: $0.91 in Q4, up 32% year over year; $3.34 for FY 2024, up 15% from the previous year.
- Operating Cash Flow: $462 million for FY 2024, with a conversion rate of 103% to net income.
- Net Leverage: Ended 2024 with a net leverage of 2.6 times.
- Book to Bill Ratio: 1.1 times for FY 2024.
- Backlog and Options: Over $21 billion.
- Dividend Increase: 10% increase to $0.165 per annum, effective March.
- 2025 Guidance: Revenue of $8.7 billion to $9.1 billion; Adjusted EBITDA of $950 million to $990 million; Adjusted EPS of $3.71 to $3.95; Operating Cash Flow of $500 million to $550 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KBR Inc (KBR, Financial) reported strong financial performance for Q4 and full year 2024, with revenues of $2.1 billion for the quarter and $7.7 billion for the year, exceeding guidance.
- The company achieved double-digit growth, with a 23% increase in Q4 and 11% for the year, driven by strong execution and operational efficiency.
- KBR Inc (KBR) successfully expanded its portfolio with significant contract wins, including a $445 million Department of Defense contract and new ammonia projects in Angola and Kazakhstan.
- The acquisition of LinQuest has been successfully integrated, contributing approximately $400 million to 2025 revenue, and enhancing KBR's capabilities in military space and digital engineering.
- KBR Inc (KBR) has a strong backlog and options totaling over $21 billion, with 75% of 2025 work already under contract, providing a solid foundation for future growth.
Negative Points
- The HomeSafe program, a significant growth driver, is still in the early stages of ramp-up, with negligible profit contribution expected in 2025.
- There are potential risks associated with the political and economic environment, including the possibility of a full-year continuing resolution for the US government fiscal 2025.
- Equity income performance in Q4 was lower due to non-cash adjustments and scope changes in projects, impacting the overall financial results.
- The integration of LinQuest, while successful, requires ongoing collaboration and alignment to fully realize synergies and growth potential.
- KBR Inc (KBR) faces challenges in the timing of awards and bookings, particularly in the mission technology segment, due to potential delays in government contract decisions.
