SAIC Downgraded to Hold at Stifel on Revenue Lag, Guidance

For the fiscal 2021 fourth quarter SAIC posted revenue of $1.72 billion, trailing analysts’ expectation of $1.78 billion. The shares are lower.
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Shares of Science Applications International  (SAIC) - Get Report dropped on Friday as Stifel analysts reacted negatively to a revenue lag and the guidance from the information-technology-services company.

For the fiscal 2021 fourth quarter ended Jan. 29, the company posted revenue of $1.72 billion, trailing analysts’ expectation of $1.78 billion, derived from a FactSet survey.

Stifel lowered its rating on SAIC to hold from buy and slashed its price target to $90 from $115. 

The latest earnings indicated “a significant and surprising debooking of backlog,” Stifel analysts said in a commentary cited by Bloomberg.

Stifel said it needed to get a better handle on what’s happening there to figure out its forecasts for sales and margins. It now has a weaker view for those two areas.

SAIC recently traded at $78.11, down 19%. It’s down about 1% over the past six months after rising earlier in the period amid strength for the IT industry during the COVID pandemic.

Other analysts acknowledged the weakness within the earnings report but maintained a positive view for the long term.

Jefferies rates the stock a buy with a $110 price target. Despite the sluggish outlook, buoyant bookings “support potential revenue upside and acceleration in the out years (despite a slowing defense budget),” Jefferies analysts said, according to Bloomberg.

Cowen has an outperform rating and $111 price target. It, too, noted the weak outlook but said the “bookings look better than optics suggest, and guide seems conservative.” 

Declines in the stock present “a unique buying opportunity,” Cowen said according to Bloomberg.

Citigroup has a buy rating. Despite the report, “the pieces can still line up to produce more consistent growth, margin expansion and [capital] allocation,” it said.