Jacobs Solutions: Hold Rating Amid Revenue Challenges and Optimistic Future Outlook

William Blair analyst Louie DiPalma has maintained their neutral stance on J stock, giving a Hold rating on April 21.

Louie DiPalma’s rating is based on several factors influencing Jacobs Solutions’ current market position. The company’s shares have recently declined by 5% following the reaffirmation of its full-year outlook, despite reporting lower-than-expected revenue and EBITDA for the quarter. This downturn was anticipated, but the guidance suggests a significant improvement in the latter half of the year. A notable factor affecting the results was a substantial reserve set aside for a legal issue within the infrastructure and advanced facilities segment, which has now been largely resolved.
Despite these challenges, there are positive indicators such as a 20% increase in backlog and a book-to-bill ratio of 1.3 times. Additionally, the company plans to distribute Amentum shares, equating to a $159 million return to shareholders. Management remains optimistic about continued strong demand in sectors like life sciences, data centers, semiconductor plants, and energy. However, until Jacobs Solutions can consistently achieve double-digit EBITDA growth, the stock is expected to remain within a range of $115 to $130, justifying the Hold rating.

According to TipRanks, DiPalma is an analyst with an average return of -15.5% and a 54.96% success rate. DiPalma covers the Technology sector, focusing on stocks such as Palantir Technologies, Motorola Solutions, and Parsons.

In another report released on April 21, Bank of America Securities also maintained a Hold rating on the stock with a $123.00 price target.