Stifel relaunches defense stock hedging as war in Ukraine rages on
Stifel resumed coverage of eight government services stocks on Friday and launched coverage of KBR Inc. as the sector faces increased demand from a high threat environment.
“New frontiers such as space and cyber highlight changing dynamics within the military as well as cabinet agencies as the Russia-Ukraine war shines a spotlight on capabilities defense and general agency resilience,” analyst Bert W. Sabin said in a research. Remark. “This push started before the conflict but was catalyzed as a result, in our view.”
Stifel has assigned “buy” ratings to Booze Allen Hamilton Holding Corp. BAH, +1.17%
(target price $96), Jacobs Engineering Group Inc. J, +0.89%
(price target $159), Leidos Holdings Inc. LDOS, +1.10%
($126 price target) and Parsons Corp. NHP, -0.71%
(Price target of $43).
Among analyst Sabin’s comments on these four buy-listed stocks, he cited Booz Allen’s outsized exposure to the navy, which takes a cut of the military’s budget, while Jacobs Engineering ranks among the “primary beneficiaries of increased capital spending in semiconductors”.
Leidos Holdings, has been described as “the government service provider best equipped to win business in an environment where size and scale are becoming increasingly important.” Parsons Corp. is well positioned to capture US government budget dollars through its Federal Solutions unit, while its critical infrastructure business benefits from spending in aviation, rail and bridges.
Stifel also launched the cover of KBR Inc. KBR, -1.91%
with a buy rating and price target of $43.
“KBR is uniquely positioned to grow across its portfolio as government spending increases in its core verticals and commercial spending increases in sustainable technologies,” Sabin said.
Sabin cited five “distinct tailwinds” that should help KBR outperform, including an increased US presence in Europe; mission technology, cyber defense and space growth; the company’s recent $20 billion US Transportation Command home goods contract win, growing international defense spending, particularly in Australia, and growth in sustainable technologies as prices of oil remain high.
“In our view, this all makes for a top-notch growth story at an attractive valuation,” Sabing said of KBR.
Analysts also gave CACI International Inc. CACI, -0.84%
($305 price target), ManTech International Corp. MANT, -2.14%
($90 price target), Science Applications International Corp. SAIC, -0.77%
($95 price target) and Vectrus Inc. VEC, -2.54%
(Price target of $42).
Read also : As Russia Continues Its War On Ukraine, Here Are 10 Aerospace & Defense Stocks Expected To Rise As Much As 39%