BigBear.ai Set to Report Q4 Earnings: Buy, Sell or Hold the Stock?

BigBear.ai BBAI is set to report fourth-quarter 2024 results on March 6.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $54.17 million, indicating a 33.54% increase from the year-ago quarter’s reported figure.The consensus mark for loss has remained at 5 cents per share, unchanged in the past 30 days. The company reported a loss of 14 cents in the year-ago quarter.BigBear.ai Holdings, Inc. Price and EPS Surprise BigBear.ai Holdings, Inc. price-eps-surprise | BigBear.ai Holdings, Inc. QuoteBBAI’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters while beating the same twice, with a negative earnings surprise of 60.72%, on average.Let’s see how things have shaped up for this announcement.Factors Likely to Have Influenced Q4 PerformanceBigBear.ai is likely to have benefited from growing government investments in its robust AI solutions.BigBear.ai’s ongoing investments in advanced AI and predictive analytics solutions, particularly in sectors like national security and supply chain management, are expected to have been a tailwind for the company in the to-be-reported quarter. These sectors have shown an increasing demand for AI-driven decision intelligence solutions, which BigBear.ai specializes in.In the third quarter of 2024, BBAI was awarded a five-year, $165 million production contract to deliver the U.S. Army’s Global Force Information Management - Objective Environment (GFIM-OE), beginning in the fourth quarter of 2024. This contract is anticipated to significantly boost the company’s revenues in the to-be-reported quarter.BigBear.ai’s sustained focus on expanding its product portfolio has helped it win corporate clients. This is likely to have driven growth during the fourth quarter. The company’s products have been integrated into AutoDesk, Amazon AMZN and Palantir solutions.AMZN’s Amazon Web Services (AWS) integrated ProModel solution to build AWS ProServe, which enabled it to provide AI-driven warehousing. Benefits from this partnership are likely to have been reflected in the quarter under review.BBAI Shares Outperform Sector, IndustryBBAI shares have gained 1.2% in the year-to-date period against the Zacks Computer & Technology sector’s decline of 6% and the Zacks Computers - IT Services industry’s decrease of 6.2%. Year-to-DatePerformanceImage Source: Zacks Investment ResearchThe company has also outperformed its industry peers, including DXC Technology DXC and ServiceNow NOW, in the year-to-date period. DXC and NOW shares have plunged 9.4% and 14.1%, respectively, over the same time frame.However, BBAI shares are currently overvalued, as suggested by its Value Score of F. In terms of the forward 12-month price/sales (P/S), BBAI is trading at 6.16X, significantly higher than its median of 2.10X and the Zacks Computer and Technology sector’s 5.95X.Price/Sales (F12M)Image Source: Zacks Investment ResearchBBAI Secures Key Government AI Contracts for GrowthBBAI’s positive momentum is supported by its ability to capitalize on the growing government investment in artificial intelligence (AI) solutions. The increasing government interest bolsters BBAI’s innovation pipeline and allows it to adapt and extend its capabilities to serve a larger market.In February, BBAI secured a contract from the Department of Defense (DoD) Chief Digital and Artificial Intelligence Office to advance its Virtual Anticipation Network prototype. The initiative will enhance DoD’s ability to assess media trends from potential foreign adversaries, supporting faster and more informed national security decisions through advanced AI analytics. This aligns with BBAI’s strategy of delivering impactful AI solutions for critical government applications.In January, BigBear.ai further solidified its position in the federal sector by securing a prime Indefinite Delivery/Indefinite Quantity contract under the U.S. Department of Navy’s SeaPort Next Generation program. This contract will enable it to deliver advanced AI-powered systems engineering, process solutions, and mission-critical technologies for naval and federal applications.Conclusion: Hold BBAI Stock for NowDespite its growing portfolio and strategic partnerships, BBAI faces intense competition in the AI market. The challenging macroeconomic environment and losses from the Virgin Orbit bankruptcy are likely to affect the company’s growth performance. Stretched valuation also remains a concern.BBAI has also become known for its annual boom-and-bust cycle, where the stock price experiences sharp surges followed by steep declines. This volatility makes the stock a risky bet for investors. BBAI currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. 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(BBAI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks