On Monday, Barclays (LON:BARC) updated its outlook on CACI International (NYSE:CACI), increasing the price target to $625 from the previous $610, while maintaining an Overweight rating on the stock. The firm's analyst cited the company's three-year forecast through fiscal year 2027 as a key factor for the adjustment.
CACI's revenue is expected to grow at a high single-digit compound annual growth rate (CAGR), with projections showing double-digit revenue growth in fiscal year 2025 and a mid 11% EBITDA margin. These figures slightly differ from Barclays' own estimates of a 9% revenue CAGR and an 11.7% EBITDA margin by fiscal year 2027.
The analyst also noted that CACI's cumulative free cash flow (FCF) from fiscal year 2025 to 2027 is anticipated to be at least $1.6 billion, which aligns with the consensus but falls short of Barclays' forecast of $1.7 billion. The expected FCF includes a greater than 15% CAGR and takes into account increased working capital for forthcoming programs. Financial targets mentioned by CACI account for the recent acquisitions of Azure Summit and Applied Insight but do not include future capital deployment.
CACI International aims to maintain a high 2x net twelve-month EBITDA leverage, which contrasts with the 3.2x proforma post-acquisitions of Azure Summit and Applied Insight. The revised $625 price target set by Barclays is based on a consistent ~15x multiple applied to the firm's updated calendar year 2026 EBITDA estimate, which has increased from $1 billion to $1.1 billion. This adjustment reflects the analyst's confidence in CACI's growth trajectory and financial strategy over the coming years.
In other recent news, CACI International has been the focus of several significant developments. Jefferies and TD (TSX:TD) Cowen have both increased their price targets on the company's shares to $570, citing strong Q1 performance and significant awards. Additionally, CACI has secured a $750 million Term Loan B Facility, which was instrumental in partially funding the acquisition of Azure Summit Technology, LLC.
The company has also been awarded a five-year task order from the U.S. Southern Command Operations, valued at up to $226 million. These recent developments underline CACI International's strategic efforts to enhance its financial standing and operational efficiency.
The first quarter of fiscal year 2025 saw an 11% increase in revenue, reaching nearly $2.1 billion, prompting CACI to raise its revenue guidance for FY 2025 to between $8.1 billion and $8.3 billion. Jefferies estimates that CACI's earnings per share (EPS) could land between $28.00 and $28.50 by Fiscal Year 2027.
The acquisition of Azure Summit Technology, LLC for a total cash consideration of $1.275 billion is expected to impact CACI's operations and market positioning.
InvestingPro Insights
CACI International's strong financial performance and positive outlook, as highlighted in Barclays' analysis, are further supported by real-time data from InvestingPro. The company's market capitalization stands at $12.73 billion, reflecting its significant presence in the defense and technology sectors. CACI's revenue growth of 13.24% over the last twelve months aligns with Barclays' projection of high single-digit compound annual growth rate through fiscal year 2027.
InvestingPro Tips indicate that CACI has been delivering strong returns, with a high return over the last year and a strong return over the last three months. This performance is consistent with the company's impressive YTD price total return of 75.47%. Additionally, CACI operates with a moderate level of debt and has liquid assets exceeding short-term obligations, which supports its financial stability and ability to fund growth initiatives.
It's worth noting that CACI's P/E ratio of 28.04 suggests it's trading at a premium relative to its near-term earnings growth. However, this valuation may be justified by the company's strong market position and growth prospects. Investors seeking more comprehensive analysis can access 13 additional InvestingPro Tips for CACI International, providing a deeper understanding of the company's financial health and market performance.
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