US Reconciliation Act And Energy Transition Will Open Markets

KBR's consensus price target remains unchanged at $60.71 as analysts weigh near-term headwinds from the terminated HomeSafe contract and increased government segment uncertainty against potential long-term positives from a refocus on core operations and valuation support.

Analyst Commentary

• HomeSafe contract termination by the Department of Defense creates immediate revenue and EBITDA headwinds and increases management credibility concerns.
• Bearish analysts cite increased uncertainty in the government segment, risk of downward guidance revisions, and potential for further budget cuts impacting future results.
• Bullish analysts argue that the contract cancellation, though negative in the short term, could eliminate a persistent overhang and distraction, allowing investors to refocus on core operations.
• Revised long-term outlooks remain under review as expectations for material 2026 contributions from the HomeSafe alliance are being reassessed following the loss.
• Despite the setback, some bullish analysts view the share price weakness as a buying opportunity, emphasizing KBR's underlying valuation appeal and manageable fundamental impact.

What's in the News

• KBR announced a major $2.459 billion NASA contract (with options up to $3.6 billion) to provide astronaut health, occupational health, and research services supporting multiple NASA spaceflight programs, further solidifying its leading role in human spaceflight operations (Key Developments).
• KBR and Axiom Space successfully completed crewed underwater tests of the next-generation AxEMU spacesuit for NASA’s Artemis III mission, marking a key technical milestone in the partnership’s support for U.S. lunar exploration (Key Developments).
• Indonesia’s Danantara plans to sign an $8 billion contract with KBR to construct 17 modular refineries as part of a U.S.-Indonesia trade pact, significantly bolstering KBR’s presence in Southeast Asia’s energy sector (Reuters/Periodicals).
• KBR continues expanding its global engineering and advisory contracts, recently winning front-end engineering design (FEED) work for INPEX’s Abadi LNG project in Indonesia, Phase 1 of Kuwait Oil Company’s heavy oil program, an ammonia-urea plant in Basra, PMC services for TAQA in Abu Dhabi, and an EPCM renewal with Basra Oil Company for the Majnoon Oil Field (Key Developments).
• KBR lowered its revenue guidance for 2025 ($7.9–$8.1B, down from $8.7–$9.1B) and 2027 ($9B+ vs. prior $11.5B+), despite recent contract wins; the company repurchased 910,056 shares for $47.98 million, bringing total buybacks since 2014 to 19.36% of shares outstanding (Key Developments).

Valuation Changes

Summary of Valuation Changes for KBR

• The Consensus Analyst Price Target remained effectively unchanged, at $60.71.
• The Net Profit Margin for KBR remained effectively unchanged, at 7.05%.
• The Consensus Revenue Growth forecasts for KBR remained effectively unchanged, at 5.4% per annum.