BigBear.ai Stock Soars Amid Analyst Optimism, but Challenges Persist

BigBear.ai Stock Could Soar to $7, According to a Wall Street Analyst. Is It a Buy at Around $5 Per Share? | The Motley Fool

Last year was a wild ride for folks holding shares of BigBear.ai (BBAI -7.48%) stock. Unbridled enthusiasm for the artificial intelligence (AI) industry drove it through the roof last March, but the stock fell hard from its peak. Shares of BigBear.ai didn't stay down long. The stock shot 229% higher between the end of September and Dec. 30, 2024. And investment bank analysts think there's more fuel in this AI stock's tank. The latest Wall Street endorsement came from H.C. Wainwright's Scott Buck. Spurred by increasing demand for AI-related services across multiple sectors, Buck raised his price target on the stock to $7 per share, which implies a 46% gain from the stock's closing price on Dec. 30. Before you get excited and load up on this volatile stock, it's important to remember analysts have nothing to lose but their reputation if things don't work out. Let's weigh recent signs of encouragement from BigBear.ai against some reasons to be cautious about this stock to see if it deserves a place in your portfolio now. This beneficiary of the AI gold rush develops data mining and analytics tools that can tap into and integrate a variety of sources. Clients with a footprint in diverse industries, including national security, digital identity, and supply chain management, hire BigBear.ai to help make informed decisions on the go. The AI-powered data analytics space is increasingly crowded, but the company differentiates itself from the pack by providing services as smaller modules that clients can add to the software infrastructure they already own. In addition to employing smaller modules, BigBear.ai provides services on edge networks to reduce latency. A combination of edge networking and smaller modules helped it sign some important deals recently. In October, the new CEO BigBear.ai appointed this year, Mandy Long, announced a five-year contract with the U.S. Army worth $165 million. To put the size of this deal in perspective, total revenue reached just $155 million in 2023. Recently, BigBear.ai told investors its biometric verification solution, veriScan, was up and running at the Denver International Airport's departure gates. Visibility is a bit of a problem for BigBear.ai and its data analytics-providing peers. Last March, the company told investors to expect total revenue to reach a range between $195 million and $215 million in 2024. It has since lowered its revenue guidance to a range between $165 million and $180 million. BigBear.ai is in a fast-growing industry, but its business is creeping forward at a snail's pace. The midpoint of management's revenue guidance range for 2024 is only 11% above the total revenue the company reported in 2022. Slow growth isn't much of a problem for an established business with profits, but BigBear.ai is bleeding money. It finished September with just $65.6 million in cash, after burning through $149 million in the first nine months of 2024. Gross margin from the first nine months of 2024 rose to $28.8 million, which isn't nearly enough to meet expenses. Interest expenses of $10.6 million chewed up more than one-third of the gross profit it generated in the period. The impairment of an intangible asset was responsible for an $85 million loss that won't recur. Even if we factor in the nonrecurring loss, this business is losing money so quickly that it will likely need more capital by the end of 2025. With a lot of debt already on its books, a dilutive secondary offering could be in the cards next year. There's a chance the developments BigBear.ai reported after the close of the third quarter will allow operations to start breaking even in 2025. Given the financial performance we've seen from this business over the past two years though, expecting sustainable profits in the foreseeable future seems like wishful thinking. Competition in this software provider's industry is rapidly intensifying. Even if you have a high tolerance for risk, it's probably best to wait until this business starts reporting sustainable profits before buying any shares.

Is BigBear.ai Stock a Buy Now? | The Motley Fool

The enterprise AI software maker faces a lot of long-term challenges. BigBear.ai (BBAI -7.48%), a developer of AI-oriented analytics tools, went public three years go by merging with a special purpose acquisition company (SPAC). The combined company's stock started trading at $9.84 a share, closed at a record high of $12.69 on April 13, 2022, but sank below $1 by the end of the year. Like many other SPAC-backed start-ups, BigBear.ai overpromised and underdelivered. Rising interest rates exacerbated that pressure by driving investors away from speculative and unprofitable companies. But today, the stock trades at about $4 -- so investors who took the contrarian view at its all-time lows two years ago are sitting on some big gains. Let's see why this volatile stock bounced back, and if it's still worth buying today. BigBear.ai's data mining and analytics tools are used to collect data from myriad sources to help its clients make faster and more informed decisions. That AI-oriented market is a crowded one, but BigBear.ai stands out from the competition in two ways. First, it mainly runs its services on edge networks instead of core networks. Second, it provides its services as stand-alone modules that can be plugged into an organization's existing software infrastructure. That flexible and scalable approach might make it an appealing alternative to bigger and stickier cloud-based platforms. During its pre-merger presentation, BigBear.ai claimed it could grow its revenue from $182 million in 2021 to $388 million in 2023. But in reality, its revenue only reached $146 million in 2021, $155 million in 2022, and flatlined at $155 million in 2023. It posted a gross margin of just 26% in 2023, compared to its original target of 50%. BigBear.ai blamed that slowdown on macro headwinds, competition, and the bankruptcy of its major customer Virgin Orbit in 2023. Yet it struggled to explain how it would overcome those major challenges, and its investors headed for the exits. CEO Reggie Brothers stepped down in October 2022 and handed the reins over to former IBM executive Mandy Long. Under Long, BigBear.ai executed an all-stock takeover of the AI vision technology company Pangiam and secured new government contracts to grow its revenue. It also aggressively cut costs to bring its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and cash flows back to positive levels in the second half of 2023. For 2024, BigBear.ai expects its revenue to grow 6% to 16%, for a range of $165 million to $180 million. Analysts expect its revenue to rise 8% to $168.3 million as its adjusted EBITDA approaches break-even levels. For 2025, they expect its revenue to rise 14% to $192.5 million with a positive adjusted EBITDA of $4.8 million. That growth should be driven by its government deals -- including a five-year $165 million contract with the U.S. Army and a new project with the Federal Aviation Administration -- and its data-sharing partnerships with bigger platforms like Amazon Web Services and Palantir Technologies. It could also expand Pangiam's presence in the nascent AI vision market. BigBear.ai increased its share count by 85% since its SPAC merger. That dilution was mainly caused by its all-stock takeover of Pangiam, its stock-based compensation, and new stock offerings. But with $65.6 million in cash and equivalents at the end of its latest quarter, it probably won't go bankrupt before its adjusted EBITDA turns positive. But with an enterprise value of $1.35 billion, BigBear.ai isn't a screaming bargain at 7 times next year's sales. That might be why insiders sold more than 80.5 million shares over the past three months but didn't buy a single share. BigBear.ai has had a great run since its penny stock lows, but it's easy to find higher-growth tech stocks that are trading at more attractive valuations. So for now, I wouldn't buy the stock unless it proves its business model is sustainable.

Is BigBear.ai Stock Going to $7? 1 Wall Street Analyst Thinks So. | The Motley Fool

One of the more assertive analyst price target raises happened at nearly the end of 2024. The affected company was artificial intelligence (AI) specialist BigBear.ai (BBAI -7.48%), which popped to a more than one-year high on the news. Is that fresh burst of optimism justified? Before market open on Monday, H.C. Wainwright's Scott Buck raised his fair value assessment of BigBear.ai shares to $7 apiece. The new level is more than double the previous $3 price target. Not surprisingly, Buck retained his buy recommendation on the ambitious AI company. The analyst is particularly impressed by BigBear.ai's ability to draw revenue from a diverse range of clients, according to reports. One entity the company is doing business with is the U.S. federal government -- quite the reliable partner -- by participating in a project with the General Services Administration. Even though the company's stock has been on a bull run since management unveiled third-quarter results at the beginning of November, the Wainwright pundit strongly feels it has plenty more runway. After all, it's operating in a tech sector segment that continues to be extremely popular among investors, given its clearly vast potential. While I don't doubt the potential of AI as a business, I feel that BigBear.ai is becoming quite richly valued. But that's what happens with hot segments; investors rush in on even the slightest hint of good news. That said, management seems to be making sensible moves and it's clearly effective at gaining (and retaining) major clients. As such, it's probably worth considering as a buy, but investors should be prepared for a bumpy ride.

Can BigBear.ai's stock balance growth and losses to hit $7?

BigBear.ai (BBAI -7.48%) stock has experienced significant volatility, marked by a dramatic rise fueled by enthusiasm for artificial intelligence (AI) last March, followed by a sharp decline. However, the stock rebounded with a remarkable 229% increase between the end of September and December 30, 2024. Investment bank analysts are optimistic about BigBear.ai's prospects. H.C. Wainwright's analyst Scott Buck recently raised his price target for the stock to $7 per share, indicating a potential 46% increase from the closing price on December 30, 2024. This optimism is driven by growing demand for AI-related services spanning various sectors. BigBear.ai develops data mining and analytics tools that integrate multiple data sources for clients in diverse industries, including national security, digital identity, and supply chain management. The company sets itself apart by offering modular services, allowing clients to incorporate smaller components into their existing software infrastructures. Additionally, BigBear.ai utilizes edge networking to minimize latency, enhancing its service offerings. Recent developments have bolstered BigBear.ai's position. In October, the newly appointed CEO, Mandy Long, announced a five-year contract worth $165 million with the U.S. Army, a contract substantial in relation to the company's total revenue of $155 million in 2023. Furthermore, BigBear.ai's biometric verification solution, veriScan, is now operational at the Denver International Airport's departure gates. Nvidia's stock shows warning signs despite 177% yearly gain Despite positive indicators, BigBear.ai faces key challenges. The company has revised its revenue projections downward, now forecasting total revenue for 2024 to range between $165 million and $180 million, a decrease from an earlier estimate of $195 million to $215 million. The midpoint of the new guidance represents only an 11% growth compared to 2022 revenue. BigBear.ai is experiencing slow growth and has recorded significant financial losses. By the end of September 2024, the company reported just $65.6 million in cash, having burned through $149 million during the first nine months of the year. Its gross profit for the same period stood at $28.8 million, insufficient to cover expenses, with interest costs consuming a considerable portion of its gross profit. An impairment of an intangible asset generated an $85 million loss, which is nonrecurring. However, even when this loss is accounted for, the company's financial challenges suggest it may need additional capital by the end of 2025. With considerable debt already, a dilutive secondary offering could be anticipated in the near future. While BigBear.ai has reported developments that could facilitate a break-even performance in 2025, the company's financial trajectory over the past two years raises concerns about its ability to achieve sustainable profits. Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

Why BigBear.ai Stock Is Skyrocketing Today | The Motley Fool

BigBear.ai (BBAI 14.25%) stock is posting big gains in Monday's trading despite sell-offs for the broader market. The software company's share price was up 16.2% as of 3:15 p.m. ET, while the S&P 500 index and the Nasdaq Composite index were both down 0.8%. BigBear.ai stock is surging today thanks to bullish coverage from H.C. Wainwright. The firm's lead analyst on the company reiterated a buy rating and raised his one-year price target on the stock from $3 per share to $7 per share. Before the market opened today, H.C. Wainwright published new coverage on BigBear.ai stock. As of this writing, analyst Scott Buck's new one-year price target of $7 per share implies additional upside of 40%. Buck is bullish on the company's move to refinance convertible senior notes worth $182.3 million, pushing the maturity date from 2026 to 2029. With the move, BigBear is minimizing near-term liquidity issues and giving itself more flexibility to spend on growth bets. The analyst also sees BigBear benefiting from a market environment that is becoming more favorable to growth stocks with smaller market caps and thinks the company's status as an artificial intelligence (AI) pure play can help support a premium valuation. With today's gains, BigBear stock is now up 129% across 2024's trading. The share price gains and new stock offerings have pushed its market cap up to $1.2 billion. The company is now valued at roughly 7.3 times this year's expected sales. With its third-quarter report, BigBear grew its sales 22% year over year to reach $41.5 million. On the other hand, the company noted that it was seeing some cautiousness from government customers when it came to AI spending. While the stock may be able to keep rallying, the company may need to deliver more bullish contract guidance or accelerating sales growth with its next quarterly report in order to support recent share price gains.

Should You Buy This Artificial Intelligence (AI) Stock in 2025? | The Motley Fool

BigBear.ai has captured investor attention with incredible gains in 2024. Is it a smart buy for the coming year, though? Data analytics expert BigBear.ai (BBAI -7.48%) has been soaring in 2024. On the morning of New Year's Eve, the stock was up by 128% in 52 weeks. Inquisitive minds (and growth-hungry investors) want to know if the gains can continue in 2025 and beyond. So let's take a look at BigBear.ai and its growth prospects. Is this a great artificial intelligence (AI) stock to buy in early 2025? BigBear.ai isn't a legendary household name, though its core business has been around since the 1980s. The current form of this company came together in 2020, when a special purpose acquisition company (SPAC) named Lake Acquisition acquired several AI-based business intelligence companies. This initial splurge included the makers of well-known software such as the ProModel process simulation package, alongside the Open Solutions Group's tech consulting services. Some of these operations were founded in the late 1980s and early 1990s. The resulting organization provides AI-driven data analytics services for healthcare, government, and heavy construction businesses. The U.S. Army, Navy, and Air Force are three of the company's largest clients. Its systems help people manage and organize equipment and other resources on a large scale, often on tight time schedules. If my description of BigBear.ai sounds a lot like C3.ai (AI -2.44%) or Palantir Technologies (PLTR -2.01%), you're on the right track. These companies are often found bidding on the same contracts. Computerized support for the defense sector is a large and thriving market, and BigBear.ai is a diversified company with significant interests in other growth sectors. The direct comparison to C3.ai and Palantir raises some important questions about BigBear.ai. The company addresses some important markets, but how large and successful is the business so far? Here's how BigBear.ai compares to its core competitors right now: Data source: Collected from Finviz and YCharts on Dec. 31, 2024. TTM = trailing 12 months. BigBear.ai is the smallest name in this group. The stock has soared recently, but couldn't keep pace with Palantir's massive gains. It's important to note that BigBear.ai's recent price gains weren't motivated by strong business results or new contract announcements. Indeed, the stock fell nearly 11% in the days after its latest earnings report, which met Wall Street's bottom-line expectations but fell short against their consensus revenue targets. Instead, the stock has surged mainly due to positive trends in the market for business intelligence and AI tools as a whole. Some of BigBear.ai's biggest jumps in recent months were actually inspired by good news from Palantir. Would I dare to buy or recommend BigBear.ai's stock today? The shares look affordable at 7.2 times sales (far below C3.ai's shares trading at 13.2x and Palantir at 66.1x sales), but the company is also deeply unprofitable and saddled with a heavy debt load. It's fair to say that the whole sector is riddled with profit-based risks, as even Palantir's cash machine trades at extremely lofty price-to-earnings ratios. But it's usually up to the underdog in such scenarios to earn its shareholder returns through stellar top-line growth, and BigBear.ai trails behind its larger competitors in this category, too: All things considered, I'd rather stay away from BigBear.ai stock right now. The company is struggling in ways I'd rather watch from the sidelines, at least through the spring of 2025. Palantir and C3.ai may be more sensible options for AI-focused growth investors, and there are many other ways to tap into the AI opportunity in this market.

BBAI Stock Soars to 52-Week High, Reaching $4.8 Amid Growth Optimism By Investing.com

BigBear.ai Holdings Inc. (BBAI) stock has reached a new 52-week high, touching the $4.8 mark, as investors rally behind the company's promising growth prospects. The AI company, now valued at $1.19 billion, has shown remarkable momentum with a 31.97% gain in the past week alone. According to InvestingPro analysis, the stock appears overvalued at current levels, despite maintaining a healthy current ratio of 2.06. This peak represents a significant milestone for the company, reflecting a period of robust performance and investor confidence. Over the past year, the stock has witnessed an impressive ascent, with a remarkable six-month return of 178.81%. With a beta of 3.3, investors should note the stock's high volatility. InvestingPro subscribers have access to 13 additional investment tips for BBAI, including crucial insights about the company's profitability outlook and valuation metrics. This surge underscores the market's positive reception to BigBear.ai's strategic initiatives and its potential to capitalize on the expanding demand for advanced analytics and AI solutions. In other recent news, BigBear.ai has made significant strides in its financial structure and defense initiatives. The technology company recently restructured its debt, exchanging approximately $182.3 million in convertible senior notes due in 2026 for new 6.00% convertible senior secured notes due in 2029. This move was part of BigBear.ai's broader strategy to streamline its financial structure. On the defense front, BigBear.ai was awarded a $165.2 million production contract with the U.S. Army and was also selected to enhance the cybersecurity of U.S. Air Force and U.S. Space Force assets through a collaboration with Proof Labs Inc. The company also participated in the U.S. Navy's Mission Autonomy Proving Ground exercises, showcasing its ConductorOS platform for enhanced maritime domain awareness. In the aviation sector, BigBear.ai implemented its veriScan™ biometric verification system at Denver International Airport, secured a significant role in a Federal Aviation Administration $2.4 billion IT contract, and entered into a master service agreement with Heathrow Airport, Europe's largest airport. H.C. Wainwright analyst Scott Buck raised the stock target for BigBear.ai to $7, reflecting growing demand for the company's artificial intelligence-enabled services. These are all recent developments that underscore BigBear.ai's growing role in the application of artificial intelligence in the fields of defense and aviation.