DA Davidson says contract termination could remove distraction for KBR investors

DA Davidson analyst Brent Thielman notes that he U.S. Department of Defense announced it was terminating the Global Households Goods Contract, which HomeSafe Alliance — a JV led by Buy-rated KBR (KBR) — won in 2021. This was a major program with the potential to ramp significantly in the coming years, although it has contributed only modestly to KBR financial results thus far, the firm adds. Expectations for the current year for HomeSafe ranged from $300M-$500M in revenue with modest EBITDA contributions, although picking up in 2026. DA Davidson has assumed $675M in contributions to revenue in 2026, which is under review. The firm does see some loss of management credibility for consistently defending the program and progress, which clearly was inconsistent with reality. However, this could also be argued to remove a distraction for investors going forward, given significant Street focus on the progression in recent years, DA Davidson argues.