SAIC Q2 revenue beats on contract growth, SilverEdge deal; lifts FY outlook

Overview

• US defense IT integrator's fiscal Q2 revenue rose 6%, beating analyst expectations

• Adjusted EPS and adjusted EBITDA for fiscal Q2 beat analyst expectations

• Company raised fiscal 2027 guidance for revenue, adjusted EBITDA, margin, and adjusted EPS

Outlook

• SAIC raises FY27 revenue guidance to $7.2 bln-$7.3 bln from $7.0 bln-$7.2 bln

• Company now sees FY27 adjusted diluted EPS at $10.65-$10.75, up from $9.90-$10.10

• SAIC reiterates FY27 free cash flow guidance of over $600 mln

Result Drivers

• CONTRACT VOLUME AND ACQUISITION - Revenue growth was driven by ramp up in volume on existing and new contracts and $20 mln contribution from SilverEdge acquisition, partially offset by contract completions

• IMPROVED CONTRACT PROFITABILITY - Operating income margin increased due to improved profitability across contract portfolio and lower costs related to federal tax audits in prior year

• HIGHER SG&A EXPENSES - Adjusted EBITDA margin declined due to higher selling, general and administrative expenses, including recovery of costs from patent settlement in prior year

Company press release: ID:nGNXbCqV2M

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 8 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the it services & consulting peer group is "buy."

• Wall Street's median 12-month price target for Science Applications International Corp is $125.00, about 0.8% below its August 28 closing price of $125.96

• The stock recently traded at 12 times the next 12-month earnings vs. a P/E of 10 three months ago

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)