What Happened?
Shares of government IT services provider Science Applications International Corporation (NASDAQ: SAIC) fell 2.4% in the morning session after JPMorgan downgraded the stock from Overweight to Neutral, cutting its price target to $115 from $140.
The analyst note cited a weakening revenue outlook and challenges with the company's strategic pivot. This downgrade follows SAIC's second-quarter financial results reported on September 5, which saw revenues decline 3% year-over-year to $1.77 billion, missing consensus estimates. The company attributed the sales miss to delays in new business awards. Consequently, Science Applications lowered its fiscal 2026 revenue guidance to a range of $7.25 billion to $7.325 billion, down from the previous forecast of $7.60 billion to $7.75 billion, signaling ongoing headwinds for its top-line growth.
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What Is The Market Telling Us
SAIC’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 4 days ago when the stock dropped 5.2% on the news that the company reported mixed second-quarter results and lowered its full-year revenue forecast.
The government technology services provider announced second-quarter revenue of $1.77 billion, a 2.7% decrease from the prior year, falling short of analyst expectations. While its adjusted earnings per share of $3.63 significantly surpassed Wall Street estimates, investors focused on the weaker outlook. SAIC lowered its full-year revenue guidance to a midpoint of $7.29 billion, down 5% from its previous forecast of $7.68 billion. The updated guidance for the full year came in 4.7% below analysts' estimates. Despite the revenue challenges, the company did raise its guidance for full-year adjusted earnings per share.
SAIC is down 9% since the beginning of the year, and at $102.05 per share, it is trading 33.8% below its 52-week high of $154.10 from November 2024. Investors who bought $1,000 worth of SAIC’s shares 5 years ago would now be looking at an investment worth $1,294.
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