KeyBanc downgrades KBR stock rating after HomeSafe program termination
Investing.com
Published Jun 23, 2025 01:40AM ET
Investing.com - KeyBanc downgraded KBR, Inc. (NYSE:KBR) from Overweight to Sector Weight on Monday following the Department of Defense's formal termination of the company's HomeSafe program. The stock, which has declined nearly 8% in the past week, appears undervalued according to InvestingPro analysis, despite maintaining solid revenue growth of 13% over the last twelve months.
The DOD terminated KBR's HomeSafe program for cause last Wednesday, according to KeyBanc. This action followed weeks of mounting negative developments, including a review initiated by the Secretary of Defense, the reintroduction of legacy movers, and considerations to reduce military moves by 50% over time. Despite these challenges, InvestingPro data shows KBR maintains a GOOD overall financial health score, with particularly strong profitability metrics.
KeyBanc noted that while it had hoped for a quick resolution on HomeSafe and for KBR's management to revise its outlook compared to the 2024 analyst day, only the former materialized. The firm indicated that investors would need a defensible rebasing of the long-term outlook to appreciate KBR's discount valuation.
The current market sentiment does not favor companies with uncertain outlooks even if their stocks appear inexpensive, KeyBanc explained in its downgrade rationale. The firm is lowering its estimates for KBR following these developments.
KeyBanc expressed concerns that further downside estimate revisions may still be pending for KBR, suggesting continued uncertainty about the company's financial outlook after the HomeSafe program termination.
In other recent news, KBR, Inc. experienced significant developments impacting its operations and financial outlook. The company announced the termination of its HomeSafe Alliance contract with the U.S. Transportation Command, a joint venture aimed at managing military relocations. Despite this, KBR stated that the termination is not expected to materially affect its adjusted EBITDA outlook for 2025, as the program was not projected to contribute to profits during its initial phase. Meanwhile, KBR secured a $161 million subcontract with Strategic Resources Inc. to provide resilience training services for the U.S. Army, enhancing the well-being of military personnel.
Analyst firms have also weighed in on KBR's recent activities. Truist Securities maintained its Buy rating on KBR, citing the relatively light impact of the HomeSafe contract termination on the company's expected EBITDA. However, Goldman Sachs downgraded KBR's stock rating to Neutral, noting that the stock's current trading level aligns with their price target and that certain segments have low visibility. Despite the downgrade, Goldman Sachs acknowledged KBR's technological strengths and strategic financial decisions. These developments reflect KBR's ongoing adjustments in response to recent contract changes and market evaluations.
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Written By: Investing.com
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