Mixed Outlook for Telos: Hold Rating Amid Revenue Challenges and Growth Opportunities

Needham analyst Matt Dezort has maintained their neutral stance on TLS stock, giving a Hold rating yesterday.

Matt Dezort’s rating is based on a combination of factors that present a mixed outlook for Telos. The company reported a decline in year-over-year revenue for the fourth quarter, although it did surpass consensus expectations. A significant factor in the Hold rating is the slightly lower-than-expected revenue guidance for the first quarter, alongside delays in revenue recognition for certain programs, which have negatively impacted forecasts for 2025.
Despite these challenges, there are positive developments such as the growth in Security Solutions and the expansion of TSA PreCheck locations. However, the adjustments to forecasts, particularly for DMDC and DHS programs, due to the timing of revenue recognition and a shift towards a higher software mix, contribute to a cautious stance. Therefore, while there are areas of growth, the uncertainties and adjustments in revenue projections justify a Hold rating.

In another report released yesterday, BMO Capital also maintained a Hold rating on the stock with a $3.00 price target.