On Thursday, Truist Securities increased its price target on shares of CACI International (NYSE:CACI) to $520 from $500, while maintaining a Buy rating on the stock. The firm's analyst highlighted CACI's valuation and the potential for upward estimate revisions as reasons for the positive outlook. CACI is now ranked as the second preferred company within the Government Services group by Truist Securities.
The firm's analyst pointed out that CACI is trading at a 10% discount compared to its peers, with a particularly strong trajectory anticipated for upward consensus estimate revisions. Despite expectations for organic growth to slow down to 5%-8% in fiscal year 2025 from 14% in fiscal year 2024, the company's second-half guidance is seen as relatively conservative. This forecast is supported by an industry-leading 1.9x book-to-bill ratio and significant contributions from major programs that are ramping up, such as FocusedFox, Spectral, and EITaaS.
Truist Securities projects an 8% organic revenue growth for CACI in fiscal year 2025, which is higher than the consensus estimate of approximately 6.8%. This forecast is based on expectations for contract ramps, on-contract growth, and minimal contributions from acquisitions. The analyst also noted that CACI is an intriguing story in terms of capital deployment, with a solid history of creating value through tuck-in acquisitions.
CACI's financial leverage was reported at just 1.8 times net leverage, which is below the high end of the target range of 3.5 times. The company has a proven record of successful acquisitions and has recently added opportunistic share repurchases to its capital deployment strategy. In January 2023, CACI completed a $250 million Accelerated Share Repurchase (ASR), demonstrating its commitment to returning value to shareholders.
In other recent news, CACI International has reported significant financial growth, with a 20% increase in Q4 revenue and a 14% rise for the full fiscal year, surpassing its own guidance. The company also secured a record $14 billion in contract awards, and its backlog rose to a robust $32 billion, marking a 22% year-on-year increase. CACI's EBITDA reached nearly $800 million, and its free cash flow surpassed $380 million.
The company has also been awarded several significant contracts. It secured an $80 million task order to provide engineering support to the U.S. Navy's Naval Sea Systems Command, and a potential six-year, $239 million task order from the U.S. Army to provide intelligence analysis and operations support to U.S. forces in Europe and Africa.
Analysts from BofA Securities and Baird have expressed optimism about CACI's future. BofA Securities raised the stock's price target from $450.00 to $535.00 and maintained a Buy rating, while Baird increased its price target to $544.
For fiscal year 2025, CACI projects a revenue growth of 6% to 8.5%, with an expected 11% increase in free cash flow per share. The company's revenue is estimated to be between $7.9 billion and $8.1 billion, with adjusted net income projected between $505 million and $525 million.
Finally, CACI has been recognized with two Nunn-Perry Awards for its mentorship excellence under the Department of Defense (DoD) Mentor Protégé Program. This recognition highlights the company's commitment to fostering growth and innovation among small businesses.
InvestingPro Insights
Recent analysis from InvestingPro has revealed several insights into CACI International's financial performance and market position. The company boasts a robust market capitalization of $10.67 billion, reflecting its significant presence in the industry. CACI's current P/E ratio stands at 25.46, indicating a high valuation relative to near-term earnings growth, which aligns with Truist Securities' observation of the stock trading at a discount compared to peers.
InvestingPro Tips suggest that despite some analysts revising their earnings downwards for the upcoming period, CACI is expected to be profitable this year, continuing its trend from the last twelve months. The stock's price stability is echoed by its low volatility, providing a level of assurance for investors looking for less turbulent market behavior. Furthermore, the company's solid financial health is underlined by its moderate level of debt and its ability to trade near its 52-week high, showcasing investor confidence.
With a keen eye on the company's performance metrics, InvestingPro notes a significant revenue growth of 14.28% over the last twelve months as of Q4 2024, alongside a healthy gross profit margin of 32.8%. These figures underscore the company's operational efficiency and its potential for sustained profitability. Moreover, CACI's return on assets stands at 6.27%, which speaks to its effective asset utilization.
For readers interested in a deeper dive into CACI's metrics and additional insights, InvestingPro provides a comprehensive list of tips, with 11 more tips available that could offer further guidance on the stock's potential. For a more informed investment decision, visit the dedicated InvestingPro page for CACI at https://www.investing.com/pro/CACI.
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