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Should You Buy, Sell or Hold BBAI Stock at Its P/S of 11.29X?
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Bigbear.ai’s (BBAI - Free Report) shares are currently overvalued, as suggested by its Value Score of F.
In terms of the forward 12-month price/sales (P/S), BBAI is trading at 11.29X, significantly higher than its median of 2.10X and the Zacks Computer and Technology sector’s 6.57X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Meanwhile, BBAI shares have surged 332.1% in the trailing 12-month period compared with the Zacks Computer & Technology sector’s return of 22.1% and the Zacks Computers - IT Services industry’s rise of 8.6%.
One Year Performance
Image Source: Zacks Investment Research
The company has outperformed its industry peers, including DXC Technology (DXC - Free Report) and ServiceNow (NOW - Free Report) , over the trailing 12-month period. While NOW shares have returned 29.4%, DXC shares have plunged 10% over the same time frame.
The outperformance can be attributed to BBAI’s expanding product portfolio and a strong network of partners, which continue to drive its growth.
With an impressive share price performance but at such a high valuation, how should investors approach BBAI stock? Let’s dig deep to find out.
BBAI Secures Key Government AI Contracts for Growth
BBAI’s positive momentum is supported by its ability to capitalize on the growing government investment in artificial intelligence (AI) solutions. The increasing government interest bolsters BBAI’s innovation pipeline and allows it to adapt and extend its capabilities to serve a larger market.
BBAI recently secured a contract from the Department of Defense (DoD) Chief Digital and Artificial Intelligence Office to advance its Virtual Anticipation Network prototype.
The initiative will enhance the DoD’s ability to assess media trends from potential foreign adversaries, supporting faster and more informed national security decisions through advanced AI analytics. This aligns with BBAI’s strategy of delivering impactful AI solutions for critical government applications.
In January, BigBear.ai further solidified its position in the federal sector by securing a prime Indefinite Delivery/Indefinite Quantity contract under the U.S. Department of Navy’s SeaPort Next Generation program. This contract will enable it to deliver advanced AI-powered systems engineering, process solutions, and mission-critical technologies for naval and federal applications.
BBAI Expands With Rich Partner Base and Military Contract
BigBear.ai’s focus on expanding its product portfolio has helped it win clients. Its products have been integrated into the solutions of Proof Labs, Autodesk, Amazon (AMZN - Free Report) and Palantir.
In December 2024, BigBear.ai announced a collaboration with Proof Labs to develop the Cyber Resilient On-Orbit solution for the Department of the Air Force. The solution will leverage Proof Labs' SpaceCREST technology for AI/ML-driven real-time cyber intrusion detection and anomaly monitoring of U.S. Space Force satellite networks.
AMZN’s cloud platform, Amazon Web Services (“AWS”), integrated BBAI’s ProModel solution to build AWS ProServe, enabling it to provide AI-driven warehousing.
Autodesk, Amazon and Palantir are the industry's undisputed leaders. These giants' adoption of BBAI’s products reflects the quality assurance of its product suite.
In the third quarter of 2024, BBAI announced a $165.15 million, five-year sole-source prime contract from the U.S. Army to complete the Global Force Information Management Production Services. This contract will transition legacy systems into a data-centric, intelligent automation platform to enhance force structure decision-making and operational readiness.
Earnings Estimates Show Upward Trend for BBAI
BigBear.ai’s expanding product portfolio, key federal contracts, and strong partnerships position it for continued growth and leadership in the AI and defense sectors. These have contributed to the optimistic sales and earnings growth estimates for 2025.
The Zacks Consensus Estimate for 2025 revenues is pegged at $194.31 million, indicating year-over-year growth of 15.27%.
The consensus mark for 2025 loss per share is pegged at 20 cents, unchanged in the past 30 days. The figure indicates a year-over-year increase of 73.33%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Conclusion: Hold BBAI Stock for Now
Despite its growing portfolio and strategic partnerships, BBAI faces intense competition in the AI market. The challenging macroeconomic environment and losses from the Virgin Orbit bankruptcy are likely to affect the company’s growth performance. Stretched valuation also remains a concern.
BBAI has also become known for its annual boom-and-bust cycle, where the stock price experiences sharp surges followed by steep declines. This volatility makes the stock a risky bet for investors.
Image: Bigstock
Should You Buy, Sell or Hold BBAI Stock at Its P/S of 11.29X?
Bigbear.ai’s (BBAI - Free Report) shares are currently overvalued, as suggested by its Value Score of F.
In terms of the forward 12-month price/sales (P/S), BBAI is trading at 11.29X, significantly higher than its median of 2.10X and the Zacks Computer and Technology sector’s 6.57X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Meanwhile, BBAI shares have surged 332.1% in the trailing 12-month period compared with the Zacks Computer & Technology sector’s return of 22.1% and the Zacks Computers - IT Services industry’s rise of 8.6%.
One Year Performance
Image Source: Zacks Investment Research
The company has outperformed its industry peers, including DXC Technology (DXC - Free Report) and ServiceNow (NOW - Free Report) , over the trailing 12-month period. While NOW shares have returned 29.4%, DXC shares have plunged 10% over the same time frame.
The outperformance can be attributed to BBAI’s expanding product portfolio and a strong network of partners, which continue to drive its growth.
With an impressive share price performance but at such a high valuation, how should investors approach BBAI stock? Let’s dig deep to find out.
BBAI Secures Key Government AI Contracts for Growth
BBAI’s positive momentum is supported by its ability to capitalize on the growing government investment in artificial intelligence (AI) solutions. The increasing government interest bolsters BBAI’s innovation pipeline and allows it to adapt and extend its capabilities to serve a larger market.
BBAI recently secured a contract from the Department of Defense (DoD) Chief Digital and Artificial Intelligence Office to advance its Virtual Anticipation Network prototype.
The initiative will enhance the DoD’s ability to assess media trends from potential foreign adversaries, supporting faster and more informed national security decisions through advanced AI analytics. This aligns with BBAI’s strategy of delivering impactful AI solutions for critical government applications.
In January, BigBear.ai further solidified its position in the federal sector by securing a prime Indefinite Delivery/Indefinite Quantity contract under the U.S. Department of Navy’s SeaPort Next Generation program. This contract will enable it to deliver advanced AI-powered systems engineering, process solutions, and mission-critical technologies for naval and federal applications.
BBAI Expands With Rich Partner Base and Military Contract
BigBear.ai’s focus on expanding its product portfolio has helped it win clients. Its products have been integrated into the solutions of Proof Labs, Autodesk, Amazon (AMZN - Free Report) and Palantir.
In December 2024, BigBear.ai announced a collaboration with Proof Labs to develop the Cyber Resilient On-Orbit solution for the Department of the Air Force. The solution will leverage Proof Labs' SpaceCREST technology for AI/ML-driven real-time cyber intrusion detection and anomaly monitoring of U.S. Space Force satellite networks.
AMZN’s cloud platform, Amazon Web Services (“AWS”), integrated BBAI’s ProModel solution to build AWS ProServe, enabling it to provide AI-driven warehousing.
Autodesk, Amazon and Palantir are the industry's undisputed leaders. These giants' adoption of BBAI’s products reflects the quality assurance of its product suite.
In the third quarter of 2024, BBAI announced a $165.15 million, five-year sole-source prime contract from the U.S. Army to complete the Global Force Information Management Production Services. This contract will transition legacy systems into a data-centric, intelligent automation platform to enhance force structure decision-making and operational readiness.
Earnings Estimates Show Upward Trend for BBAI
BigBear.ai’s expanding product portfolio, key federal contracts, and strong partnerships position it for continued growth and leadership in the AI and defense sectors. These have contributed to the optimistic sales and earnings growth estimates for 2025.
The Zacks Consensus Estimate for 2025 revenues is pegged at $194.31 million, indicating year-over-year growth of 15.27%.
The consensus mark for 2025 loss per share is pegged at 20 cents, unchanged in the past 30 days. The figure indicates a year-over-year increase of 73.33%.
BigBear.ai Holdings, Inc. Price and Consensus
BigBear.ai Holdings, Inc. price-consensus-chart | BigBear.ai Holdings, Inc. Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Conclusion: Hold BBAI Stock for Now
Despite its growing portfolio and strategic partnerships, BBAI faces intense competition in the AI market. The challenging macroeconomic environment and losses from the Virgin Orbit bankruptcy are likely to affect the company’s growth performance. Stretched valuation also remains a concern.
BBAI has also become known for its annual boom-and-bust cycle, where the stock price experiences sharp surges followed by steep declines. This volatility makes the stock a risky bet for investors.
BBAI currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.