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On Thursday, Truist Securities initiated coverage of Jacobs Engineering Group Inc. (NYSE:) with a Hold rating and established a price target of $154.00.
The financial institution highlighted the company’s upcoming strategic move, where Jacobs Engineering plans to separate and merge its Government Solutions business, which includes Critical Missions Solutions, and the Cyber and Intelligence business that is part of Divergent Solutions, with Amentum in the second half of 2024. This transaction is expected to create a significant player in the government IT solutions sector.
Following the spin-out, the remaining company, referred to as RemainCo, will consist of Jacobs’ infrastructure business, PA Consulting, and approximately 15% of Divergent Solutions that focuses on data and software solutions for infrastructure clients. The new Jacobs is set to become a streamlined entity, concentrating solely on infrastructure professional services and consulting.
According to Truist Securities, the market has already recognized the potential transformation of Jacobs, noting that its trading performance is in alignment with that of AECOM, a firm already specialized in infrastructure. Jacobs is acknowledged for having a solid balance sheet and a compelling narrative of returning value to shareholders.
However, Truist Securities has expressed a desire for further details regarding the financial outlook of RemainCo after the spin-off. The firm is looking for additional information to understand the expected timeline and the path that RemainCo will take to reach financial performance comparable to its peers in the sector.
InvestingPro Insights
As Jacobs Engineering Group Inc. (NYSE:J) prepares for a strategic reorganization, investors are closely monitoring the company’s financial metrics and market performance. According to InvestingPro data, Jacobs Engineering has a market capitalization of $18.93 billion and is trading at a P/E ratio of 26.9, reflecting a premium relative to near-term earnings growth expectations. The company’s revenue growth over the last twelve months as of Q1 2024 stands at 8.94%, indicating a steady upward trajectory in its financial performance.
Further underlining the company’s strong market position, Jacobs Engineering has experienced a robust return over the last three months, with a price total return of 17.1%. This is coupled with a notable dividend growth of 26.09% in the same period, showcasing the company’s commitment to shareholder returns, as evidenced by its five-year streak of raising dividends—an InvestingPro Tip worth noting.
Investors considering Jacobs Engineering can also find additional InvestingPro Tips to guide their decisions. Currently, there are 10 more tips available on InvestingPro, which can be accessed by visiting: https://www.investing.com/pro/J. For those looking to delve deeper into the company’s analytics, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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