Parsons Corp. (NYSE: PSN) shares climbed 3.9% on Friday after Baird upgraded the stock to Outperform from Neutral, citing low investor sentiment and what it described as conservatively set guidance.
Analyst Andrew Wittman raised the price target to $57 from $48, reflecting expectations for improved operational momentum in the second half of the year. Wittman highlighted several near-term catalysts, including the ramp-up of seasonal Canadian mine projects, the commencement of $400 million in Other Transaction Agreements (OTAs) that contributed nothing in the first half, and approximately $40 million in JCHK production with long-lead chips already ordered.
First-half organic growth stood at 3%, while guidance suggests a roughly 1% increase in the second half. The company also noted a protested command-and-control award valued at $190 million, which management expects to clear and contribute modestly to results. Wittman emphasized that the Federal Aviation Administration's (FAA) scope, estimated at around $800 million, is significantly better than earlier concerns expressed in December.
The analyst pointed to an agency growth tracking rate of plus 40% and projected high-margin product contributions of 30-40% next year as potential upside drivers for estimates. Year-to-date book-to-bill trends have improved following a soft patch earlier in the year, though Wittman cautioned that federal timing remains a key risk regarding the resolution of the protested award.
