The concept of the company Science Applications International Corp.NYSE: SAIC) on Thursday was downgraded to a Hold investment rating from Buy by analysts at Jefferies. He also said that the economic growth of engineering and technology professionals will be slower than their peers in the next few years.
SAIC ( SAIC ) was down 2.3% as of 10:12 a.m. ET in New York Stock Exchange trading.
Jefferies estimates that SAIC ( SAIC ) will see annual growth of 0.9% in revenue through 2025, compared to 4.1% for similar companies.
SAIC’s partners include CACI International (CACI), General Dynamics Information Technology (GD), Leidos Holdings (LDOS) and Parsons (PSN).
When SAIC ( SAIC ) reports its Q3 results in the next few weeks, Jefferies expects the company to lower its 2023 revenue guidance to $7.50 billion to $7.52 billion from a forecast of $7.50 billion to $7.55 billion.
The investment bank expects SAIC ( SAIC ) to lower its 2023 EPS guidance to $7.05-$7.15 a share from $7.00-$7.20 previously. Jefferies’ estimate of $7.10 is in line with forecasts among Wall Street analysts.
Shares of SAIC (SAIC) are also expensive relative to their earnings in the broader market. SAIC trades at a 12% discount to the forward P/E of the Standard & Poor’s 500 index (SP500), compared to a steep discount of 37%, according to Jefferies. The change also shows SAIC’s ( SAIC ) stock price is close to Jefferies’ target of $110.
SAIC (SAIC) this year has risen 26% through Nov. 16, in contrast to the 17% loss of the S & P 500.