What Happened?
Shares of government and sustainable technology solutions company KBR (NYSE: KBR) jumped 2.6% in the afternoon session after the company reported third-quarter earnings that beat profit expectations, which was followed by a positive analyst action on the stock.
The engineering and technology firm posted adjusted earnings of $1.02 per share, which was up 21% from the same period in the previous year and ahead of what analysts had predicted. KBR's adjusted profit, or EBITDA, also rose 10% to $240 million, with an improved margin of 12.4%. However, the report was not all positive, as revenue of $1.93 billion came in flat and missed expectations. The company also lowered its revenue forecast for the full year. Despite the weaker sales outlook, investors seemed to focus on the strong profitability. This positive view was reinforced when analysts at Truist raised their price target on KBR's shares to $62 from $60 and maintained a buy rating.
After the initial pop the shares cooled down to $42.84, up 3.2% from previous close.
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What Is The Market Telling Us
KBR’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 18 days ago when the stock gained 3.7% on the news that a softened tone from President Donald Trump on U.S.-China relations boosted investor sentiment. The positive shift followed a weekend post on Truth Social where Trump stated, "Don't worry about China, it will all be fine!" and expressed a desire to help rather than hurt the country's economy. This statement provided significant relief to markets that had ended the prior week with steep losses. In response, the Nasdaq Composite jumped 2.2%, the S&P 500 gained 1.6%, and the Dow Jones Industrial Average closed 1.3% higher, as investors' fears of escalating trade tensions subsided.
KBR is down 26% since the beginning of the year, and at $42.84 per share, it is trading 40.5% below its 52-week high of $72.02 from November 2024. Investors who bought $1,000 worth of KBR’s shares 5 years ago would now be looking at an investment worth $1,851.
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