DRS Stock Forecast & Price Target

Leonardo DRS Inc. has demonstrated significant growth potential, marked by total bookings reaching $1.3 billion, resulting in a 1.4x book-to-bill ratio year-to-date and a record backlog of $8.9 billion, up 7.8% year-over-year. The company achieved a remarkable 24% year-over-year increase in new funded bookings during Q3/25, contributing to a robust increase in funded backlog and underscoring strong demand, particularly within its Integrated Mission Systems segment, which saw 34% revenue growth. Additionally, the improvement in EBITDA margins, supported by operational efficiencies and strong program performance, reflects enhanced profitability and positions Leonardo DRS favorably for continued growth.

Leonardo DRS Inc. has displayed a decline in its consolidated adjusted EBITDA margin, falling to 12.2%, which represents a year-over-year decrease of 10 basis points, largely due to increased research and development expenses and less efficient program execution. The Advanced Sensing and Computing segment experienced a more pronounced margin compression, with adjusted EBITDA margins dropping to 11% driven by a significant allocation of R&D funds that negatively impacted profitability, reflected in a 100 basis point decrease from the prior year. Additionally, challenges in the supply chain for Germanium, alongside sustained high R&D costs, may impede future profitability and overall financial performance, creating a negative outlook for the company's stock.