What Happened?
Shares of defense, intelligence, and IT solutions provider CACI International (NYSE: CACI) fell 3% in the afternoon session after an analyst at Raymond James downgraded the stock to "Market Perform" from "Outperform." The downgrade from a prominent Wall Street firm suggests a more neutral outlook on the government IT contractor's future performance. According to the analyst, CACI's strong focus on national security, which accounts for about 94% of its sales, coupled with solid execution, has driven the stock's price up to the firm's previous target. The downgrade reflects the view that after a significant run-up in share price, the stock is "due for a pause." Since Raymond James' last upgrade in January, CACI shares have surged approximately 25%, substantially outpacing the S&P 500's 6% gain over the same period. This change in rating indicates that while the company's fundamentals remain strong, its valuation may now fully reflect its near-term prospects.
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What Is The Market Telling Us
CACI’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.
CACI is up 19% since the beginning of the year, but at $489.17 per share, it is still trading 14.5% below its 52-week high of $572.44 from November 2024. Investors who bought $1,000 worth of CACI’s shares 5 years ago would now be looking at an investment worth $2,410.
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