BigBear.ai (BBAI), AI-powered decision intelligence solutions provider, recently released its lower-than-expected fourth quarter results, raising questions among investors about its potential as a Buy. Despite this miss, the company’s gross margin and ending backlog showed improvement in the quarter. Thus, while BBAI faces short-term challenges, its revenue growth, strategic focus, and expanding market presence suggest a promising future.
Following the release, BigBear.ai stock dropped 14.3% in after-market trading. Still, the stock has shown resilience, gaining 193% over the past six months, driven by strategic wins and market optimism.
BBAI’s Q4 Results Highlights
In a quick recap, BigBear.ai reported revenue of $43.8 million, up 8% year-over-year. However, it fell short of analyst expectations of $54.61 million. Meanwhile, the company posted an adjusted loss of $0.43 per share, missing the consensus estimate of a loss of $0.05. Also, it widened from the previous year’s $0.14 per share.
On the positive side, BigBear.ai’s gross margin came in at 37.4% up from 32.1% in the prior-year’s quarter. Further, the company’s ending backlog surged 2.5 times year-over-year to $418 million.
It is worth highlighting that the company’s ongoing investments in research and development are a key factor behind its losses. These investments are a key to staying competitive in the rapidly evolving AI industry.
Looking ahead, BigBear.ai provided revenue guidance for Fiscal 2025, projecting a range of $160 million to $180 million.
BigBear.ai’s Contract Wins Fuel Optimism
BBAI has witnessed some notable success recently. Earlier this month, the company was awarded contracts by the U.S. Navy and the Department of Defense’s Chief Digital and Artificial Intelligence Office (CDAO). These contracts reflect its robust foothold in the defense sector.
Further, the company has been expanding its product portfolio and entering commercial markets, such as facial recognition technology for secure payments.
Overall, BigBear.ai’s strong position in the AI and defense sectors and its growth efforts bode well for the long term. However, its financial challenges and reliance on government contracts pose risks.
Is BBAI Stock a Good Buy?
Turning to Wall Street, BBAI stock has a Moderate Buy consensus rating based on two Buys assigned in the last three months. At $7.50, the average BigBear.ai price target implies 78.57% upside potential.
