On Monday, Stifel maintained a Buy rating on CACI International (NYSE: CACI) stock and increased the price target to $500 from the previous $440. The firm's decision is based on the company's improved win rate and the anticipation of better-than-expected growth.
CACI International, a provider of information solutions and services to the U.S. government, has secured multi-billion dollar contracts, including the NASA NCAPS, which has contributed to the firm's optimistic outlook.
Stifel highlighted CACI's favorable exposure and the potential for long-term margin improvement as reasons for the positive stance. The updated model by Stifel reflects these new contracts and the expectation of a higher valuation multiple for the company.
The analyst pointed out that CACI has been awarded over $20 billion in contracts larger than $100 million within the last 18 months, signaling a structural improvement in the company's ability to generate future free cash flow (FCF) growth.
The price target adjustment to $500 is a result of applying a higher multiple than the previously used 13.5x multiple to the forecasted FY25 EBITDA. This revision is in recognition of CACI's demonstrated performance and potential for sustained growth.
While the outlook for CACI is positive, Stifel also noted that execution risk is a factor to monitor, as the company will be managing various new contract ramps simultaneously. Nonetheless, the momentum CACI has shown is expected to continue, supporting the firm's confidence in the raised price target.
In other recent news, CACI International has been the subject of significant attention due to its recent financial performance and analyst upgrades. The company reported robust third-quarter earnings per share (EPS) of $5.74, surpassing analyst expectations, and strong revenue of $1.94 billion, exceeding consensus estimates.
Following these results, several analyst firms, including Truist Securities, TD Cowen, Wells Fargo (NYSE:WFC), and Stifel, upgraded their price targets for CACI, maintaining positive ratings on the stock.
Truist Securities raised its price target to $500, buoyed by CACI's acquisition of a $2 billion NASA contract, while TD Cowen increased its target to $435, citing the company's promising outlook.
Wells Fargo boosted its target to $468, anticipating CACI's growth to outpace consensus estimates for fiscal year 2025. Stifel also raised its target to $440, following CACI's robust third-quarter earnings that exceeded both consensus and Stifel's estimates.
These recent developments reflect a positive sentiment among analysts about CACI's financial projections and growth trajectory, particularly in light of the company's recent contract wins and strong earnings results.
InvestingPro Insights
As CACI International (NYSE: CACI) garners a bullish stance from Stifel with a heightened price target, real-time data from InvestingPro provides additional context to the company's financial health and market performance. With a market capitalization of $9.59 billion and a P/E ratio standing at 24.66, CACI is trading at a premium relative to its near-term earnings growth. The company's revenue growth remains robust, with a 10.28% increase over the last twelve months as of Q3 2024, and a slightly higher quarterly uptick of 11.08% in Q3 2024.
InvestingPro Tips highlight that CACI's stock generally trades with low price volatility, which may appeal to investors seeking stability. Additionally, the company operates with a moderate level of debt, which is a reassuring sign of financial prudence. Analysts predict CACI will be profitable this year, supported by a profitable track record over the last twelve months. Furthermore, the company's shares are trading near their 52-week high, reflecting a high return over the last decade and a strong return over the last five years. Notably, CACI does not pay a dividend, which could be a consideration for income-focused investors.
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