On Thursday, Benchmark, a financial analysis firm, increased its stock price target for Parsons Corp (NYSE:PSN) to $101, up from the previous target of $68, while maintaining a "Buy" rating on the stock. The revised price target comes after Parsons Corp announced its second-quarter results for the fiscal year 2024, which showcased a 20% organic growth.
The company's performance has been strong, with an increase in EBITDA guidance for the fiscal year 2024. Benchmark's analyst noted that concerns regarding Saudi infrastructure spending were "overblown."
According to the analyst, no Saudi program accounts for more than 2% of Parsons' revenues, and the projects that Parsons is involved with are long-cycle, which mitigates risks associated with spending fluctuations.
Parsons Corp has also been recognized for its strategic approach to acquisitions, with a consistent track record of integrating 2-3 meaningful additions each year. The company's portfolio is evolving into a politically resilient infrastructure player as the United States approaches its presidential election cycle.
In the domestic market, Parsons' engagement with the Infrastructure Investment & Jobs Act (IIJA) focuses on tangible assets rather than politically sensitive programs. This strategic focus is expected to provide more stable long-term support for the company's projects.
Moreover, Parsons has recently expanded its portfolio by acquiring BlackSignal, a cybersecurity asset valued at $200 million. This acquisition is in line with Parsons' strategy of adding high-margin and customer-expanding assets, which continues to demonstrate strong potential for future growth.
The new price target of $101 set by Benchmark is based on a 16.5 times multiple of the forecasted fiscal year 2025 enterprise value to EBITDA (EV/EBITDA) for Parsons Corp.
In other recent news, Parsons Corporation has experienced significant growth in its second-quarter financial performance for 2024. The company reported record revenue of $1.7 billion, marking a 22% organic growth year-over-year, and adjusted EBITDA of $150 million, a 27% increase from the previous year. This growth is attributed to the strategic focus on high-value solutions, leveraging software and advanced technologies in both its Federal Solutions and Infrastructure portfolios.
Parsons Corporation has also expanded its portfolio through the acquisition of BlackSignal Technologies, a move expected to enhance the company's capabilities in cyber operations and electronic warfare. This acquisition, valued at $200 million, aligns with the company's strategy of adding high-margin and customer-expanding assets.
Furthermore, the company's financial guidance for 2024 has been revised upwards due to strong performance and a robust pipeline. The company's backlog currently stands at $8.8 billion, with $13 billion in recent contract wins.
Benchmark, a financial analysis firm, has increased its price target for Parsons Corporation to $101, up from the previous target of $68, while maintaining a "Buy" rating on the stock. The new price target is based on a 16.5 times multiple of the forecasted fiscal year 2025 enterprise value to EBITDA (EV/EBITDA) for Parsons Corporation.
InvestingPro Insights
Following the positive outlook from Benchmark, real-time data from InvestingPro corroborates the growth trajectory of Parsons Corp (NYSE:PSN). The company's market capitalization stands at a robust $9.7 billion, reflecting investor confidence in its market position.
Furthermore, the company's revenue has shown a significant uptick, with a 28.35% increase over the last twelve months as of Q2 2024, indicating a strong organic growth that aligns with the reported 20% organic growth in its second-quarter results.
An InvestingPro Tip highlights that analysts have revised their earnings upwards for the upcoming period, suggesting an optimistic consensus on Parsons' financial prospects. Moreover, the company's stock has yielded a strong return over the last year, with an impressive 84.55% price total return, signaling robust investor returns and market performance.
While the P/E ratio is currently high at 152.72, indicating a premium on earnings, Parsons' strategic acquisitions and growth in high-margin sectors such as cybersecurity could justify this valuation. Investors should also note that Parsons' liquid assets exceed its short-term obligations, which is a positive indicator of the company's financial health and its ability to sustain growth.
For those interested in a deeper analysis, InvestingPro offers several additional tips on Parsons Corp, which can be explored for a more comprehensive investment decision-making process.
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