Amentum Faces Growth Slump As Government Cuts Spending, Analyst Expects Merger To Boost Margins

Group 1 - Amentum Holdings, Inc. has been initiated with a Neutral Rating and a price forecast of $21 by Goldman Sachs analyst Noah Poponak [1] - The company has a lower relative valuation compared to its peers, with current slower growth and lower margins than other companies in the industry [1][3] - Amentum's revenue base is large and diversified, reporting$14 billion in revenue and a backlog of $45 billion, which provides scale for potential success [2] Group 2 - The merger with Jacobs' government services business presents opportunities for growth and margin expansion, but Amentum faces sector headwinds due to expected revenue growth slowing or potentially turning negative [3] - Amentum's EBIT and free cash flow margins are lower than those of other companies in the government services sector, which may contribute to slower growth [3][4] - The company's balance sheet is more leveraged than its peers, which may deter potential buyers amid market concerns about the sector's future [4] Group 3 - EBITDA projections for FY25 and FY26 are estimated to be 2% and 3% higher than consensus estimates, respectively [4] - EPS is projected to surpass both consensus and the company's guidance, although a decline in revenue is anticipated for FY27 [5]