On Thursday, Goldman Sachs revised its stance on CACI International (NYSE:CACI), downgrading the stock from Neutral to Sell and significantly reducing its price target to $373 from the previous $540. The firm's analysis indicates a potential 16% downside, contrasting with the average 3% upside projected for its coverage spectrum.
According to InvestingPro data, CACI's RSI suggests the stock is in oversold territory, with six analysts recently revising their earnings estimates downward. CACI International, known for its focus on defense and government services, is now facing potential headwinds according to Goldman Sachs.
The analyst at Goldman Sachs highlighted concerns over impending reductions in the Department of Defense (DoD) budget and federal civilian agency budgets. These anticipated cuts are expected to pose near-term risks for CACI International. Despite these concerns, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.75 and moderate debt levels. The firm anticipates a deceleration in the company's book-to-bill ratio, which could slow shortly.
Goldman Sachs also foresees challenges in organic revenue growth for CACI International, cautioning that it may decelerate and possibly turn negative in the medium term. The firm's analysis suggests that CACI's free cash flow (FCF) margin and return on invested capital (ROIC) are lower than those of its peers, which could impact the company's financial performance.
The outlook for earnings per share (EPS) growth over the next few years is also limited, according to Goldman Sachs. The firm's estimates for CACI International's EPS are below the consensus, which may raise concerns among investors about the company's profitability in the coming years.
In other recent news, CACI International secured a $290 million contract with the National Geospatial-Intelligence Agency for artificial intelligence and geospatial services.
The company's strong revenue growth of 13% over the past year positions it well for this contract. In acquisition news, CACI completed the purchase of Azure Summit Technology for $1.275 billion, partially financed by a $750 million Term Loan B Facility.
Analysts from various firms have been active in their assessments of CACI. Barclays (LON:BARC) increased its price target for the company to $625 based on a promising three-year forecast. Jefferies and TD Cowen also raised their targets to $570, attributing their decisions to strong Q1 performance and significant awards.
In terms of earnings, CACI reported an 11% increase in Q1 revenue for fiscal year 2025, reaching nearly $2.1 billion. This led the company to raise its revenue guidance for FY 2025 to between $8.1 billion and $8.3 billion. Jefferies estimates that CACI's earnings per share could be between $28.00 and $28.50 by Fiscal Year 2027.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.