DRS Stock Forecast & Price Target

Leonardo DRS is well positioned because its merchant-supplier model embeds mission-critical sensing, computing, and propulsion content across long-lived defense platforms, creating durable switching costs, recurring upgrades, and high revenue visibility. Record funded backlog of $5.6 billion, 1.5x book-to-bill, and 21% year-over-year backlog growth underscore exceptional demand, while ASC bookings rose 34% and IMS bookings 13%, with C-UAS and naval electrification driving momentum. Management’s raised 2026 outlook, expected low-double-digit growth in 2027, and a stronger IMS margin baseline near 16% reflect improving execution, favorable mix, and expanding exposure to priority programs such as Columbia-class and counter-UAS.

Leonardo DRS is exposed to a fragile earnings profile because roughly 88% of revenue is fixed-price, leaving the company to absorb overruns on complex, long-duration programs, while 2025 fixed-price revenue was about $3.2 billion versus only about $443 million of flexibly priced work. Its dependence on the U.S. government for roughly 80% to 82% of revenue, plus more than a third from the Navy, makes growth highly vulnerable to appropriation delays, continuing resolutions, and any FY27 topline below the roughly $1.5 trillion request. On top of that, germanium shortages, unproven production-scale technologies, sole-source concentration, and the $450 million Raft integration all elevate execution risk and could pressure margins and backlog conversion.