On Tuesday, Truist Securities maintained its Buy rating on V2X, Inc. (NYSE:VVX) shares with a consistent price target of $68.00. The decision follows V2X's announcement of an increased midpoint for its 2024 revenue and adjusted earnings per share (EPS) guidance after reporting better than expected results for the third quarter.
The company's quarterly book-to-bill ratio met expectations, indicating a steady flow of business that matches the company's output, with projections for increased bookings in the second half of the year.
V2X's recent contract wins are expected to contribute to additional growth, with demand in the Indo-Pacific and the Middle East regions identified as key opportunities for expansion. These developments have contributed to the firm's positive outlook on the company's near-term performance.
However, V2X also indicated that it anticipates margins in 2025 to be similar to current levels, which could temper some of the positive sentiment arising from the increased guidance for the near term. Despite this, Truist Securities believes that the growth potential for V2X remains strong.
The $68 price target set by Truist Securities is based on a 9.4 times multiple of V2X's estimated 2025 enterprise value to EBITDA (EV/EBITDA), which is significantly lower than the government service industry's average multiple of approximately 15 times. This valuation suggests that V2X's stock may be undervalued compared to its peers, reinforcing the firm's Buy rating.
In other recent news, V2X has reported an 8% increase in revenue year-over-year, reaching $1.08 billion, during its Third Quarter 2024 Earnings Conference Call. The company's adjusted EBITDA rose by 28% to $82.7 million, and adjusted diluted EPS increased by 77% to $1.29. This growth was significantly contributed by the Indo-Pacific region.
V2X also announced a substantial total backlog of $12.2 billion and improved net leverage to 3.27 times. The company has secured $5 billion in recent awards and raised its 2024 revenue guidance, while maintaining stable adjusted EBITDA and net cash flow projections.
Despite a 22% decrease in European revenues due to reduced volume in a specific program, V2X secured a $225 million warfighter training readiness contract and expressed optimism about the transition of the F-16 cockpit upgrade contract from development to production. These are all recent developments that signify the company's commitment to growth and strategic initiatives.
InvestingPro Insights
V2X's recent performance and future outlook align with several key insights from InvestingPro. The company's revenue growth of 6.92% over the last twelve months and a strong 9.65% quarterly growth support Truist Securities' positive stance on V2X's expansion potential. This growth trajectory is further reinforced by an InvestingPro Tip indicating that net income is expected to grow this year.
Despite the company not being profitable over the last twelve months, analysts predict V2X will turn profitable this year, which could justify the maintained Buy rating. The company's strong return of 31.58% over the last three months also suggests growing investor confidence, possibly driven by the recent contract wins and improved guidance mentioned in the article.
InvestingPro offers 5 additional tips for V2X, providing investors with a more comprehensive analysis of the company's financial health and market position. For those seeking a deeper understanding of V2X's potential, exploring these additional insights on InvestingPro could be valuable.
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