Bank of America Securities (BofA) updated its forecast for CACI International (NYSE:CACI), increasing the price target from $670 to $750 while reaffirming a Buy rating for the defense firm. Currently valued at approximately $655.46 per share, CACI's stock price is trading just shy of its 52-week high at $663.63, reflecting its ongoing positive momentum and an impressive 55.45% return over the previous year.
This upward revision is attributed to CACI demonstrating stronger than initially anticipated margin expansion coupled with robust free cash flow (FCF) generation. These favorable outcomes came despite what BofA characterized as a sluggish environment for government contract awards during the recent quarter.
According to InvestingPro data, the company boasts a 4% free cash flow yield, operates with moderate debt levels, and maintains liquid assets that surpass its short-term liabilities, indicating a stable balance sheet.
BofA further emphasized that CACI has improved its full-year guidance even with earlier concerns about potential disruptions from a prolonged government shutdown affecting the latter half of fiscal year 2026. Impressively, an estimated 95% of the company's projected revenue for FY26 is expected to derive from existing contracts. Additionally, the company anticipates submitting bids totaling approximately $20 billion by the end of that fiscal year.
Reflecting these improved fundamentals, BofA has raised its adjusted EBITDA and adjusted earnings per share (EPS) forecasts for CACI in fiscal 2026, anticipating sustained growth driven by an expanded operational base.
In other developments, CACI released its second-quarter fiscal 2026 earnings report, showcasing results above expectations with an EPS of $6.81 compared to the projected $6.48, representing a 5.09% earnings surprise. However, revenue for the quarter came in slightly lower than expected at $2.2 billion versus the projected $2.27 billion. Despite this modest revenue shortfall, market reception has been favorable, with analysts from various firms taking note and adjusting their outlooks accordingly.
These earnings figures underscore CACI’s ability to deliver profitable performance amidst some top-line challenges. Market participants remain attentive to the company’s continued performance in the defense sector, particularly as it navigates government contract landscapes and fiscal uncertainties moving forward.