SAIC Analysts Cut Their Forecasts After Q1 Earnings

Science Applications International Corporation (SAIC) reported adjusted Q1 earnings of $1.92 per share, missing analyst estimates of $2.22, while revenue slightly exceeded expectations at $1.88 billion versus $1.87 billion. Despite the earnings miss, SAIC reaffirmed its FY26 revenue outlook of $7.60-$7.75 billion and adjusted EPS of $9.10-$9.30, both figures falling short of analyst consensus. Following the announcement, UBS and Truist Securities analysts lowered their price targets on SAIC, though the stock price rose 2.7% to $102.95 on Tuesday.

Analysis

Science Applications International Corporation (SAIC) reported first-quarter adjusted earnings of $1.92 per share, falling short of the $2.22 per share market estimate, while its quarterly sales of $1.88 billion marginally surpassed expectations of $1.87 billion. Despite the earnings miss, CEO Toni Townes-Whitley highlighted "steady progress" and pointed to significant opportunities stemming from new technologies, software deployment for efficiency, and an elevated global threat environment. However, SAIC reiterated its 2026 revenue outlook of $7.60 billion to $7.75 billion and an annual adjusted EPS outlook of $9.10 to $9.30. Both these guidance ranges are notably below the prevailing analyst consensus estimates of $7.93 billion for revenue and $10.24 for EPS, signaling potential headwinds or a conservative company outlook. In a somewhat counterintuitive market reaction, SAIC shares increased by 2.7% to $102.95 following the announcement. This occurred even as analysts from UBS and Truist Securities maintained Neutral/Hold ratings but reduced their price targets to $111 (from $121) and $100 (from $115) respectively, reflecting concerns likely tied to the earnings miss and subdued guidance. The overall sentiment is characterized as mixed, with SAIC's specific sentiment score at -0.2, suggesting underlying investor caution despite the stock's immediate positive movement.

Key Decisions for Investors

• Investors should critically evaluate SAIC's current valuation following the Q1 earnings miss and below-consensus FY26 guidance, particularly in light of the subsequent share price increase which may not align with fundamental performance.
• Closely monitor SAIC's execution on its enterprise growth strategy in coming quarters to ascertain if the opportunities highlighted by the CEO can translate into financial results that bridge the gap with analyst expectations and justify a more positive outlook.
• Factor in the lowered price targets from both UBS and Truist Securities, which suggest tempered growth expectations and potentially increased risk, when making investment decisions or adjusting existing positions in SAIC.