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BigBear.ai Pivots to Commercial Use: Is It a Risky Expansion?

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Key Takeaways

  • BBAI's backlog rose 30% to $384.9M as it shifts focus to commercial markets like ports and airports.
  • EPS estimates for 2025 and 2026 imply losses, but indicate year-over-year growth.
  • BBAI's P/S ratio of 11.16X signals potential upside versus peers like PLTR at 71.99X and C3.ai at 6.81X.

BigBear.ai Holdings, Inc.’s (BBAI - Free Report) strategic shift toward the commercial sector comes with its pros and cons. In the short term, this strategic shift indeed possesses financial and execution risks. But if long-term is considered, diversification of the service portfolio, away from defense and government projects, allows the company to expand market share and creates a new revenue stream, solidifying its profitability structure and margin expansion trends. In the first quarter of 2025, its revenues grew 5% year over year to $34.8 million, with gross margin expanding 20 basis points to 21.3%.

Notably, the Pangiam acquisition enables BBAI to explore the commercial sector globally (especially airports and ports), offering the latter a strong Vision AI portfolio focused on travel, trade and identity. One of the widely demanded commercial AI solutions, Pangiam Threat Detection, is a strategic addition to BBAI’s portfolio, which strengthens its market share in the commercial sector. Moreover, BigBear.ai’s other commercial and software solutions, including veriScan, Trueface, Pro Model AI, ConductorOS and Shipyard.ai, offer it a competitive edge across the market.

Currently, the company is focusing on introducing accretive innovations that align with its strategic shift toward commercial use, resulting in backlog growth. Besides, BBAI is more focused on its long-term growth regarding this strategic shift, as it is grabbing onto opportunities that offer large multi-year programs and deep commercial relationships. The company believes that in doing so, it will ensure stable compounding value over time. As of March 31, 2025, BBAI’s backlog grew 30% year over year to $384.9 million.

BBAI Stock’s Price Performance vs Other Market Players

Shares of this Virginia-based AI-powered decision intelligence solutions provider have soared 117% in the past three months, significantly outperforming the Zacks Computers - IT Services industry, the Zacks Computer and Technology sector and the S&P 500 index.

Zacks Investment Research
Image Source: Zacks Investment Research

Sharing the market space with BigBear.ai, other renowned players like C3.ai, Inc. (AI - Free Report) and Palantir Technologies Inc. (PLTR - Free Report) are gaining from the robust market trends for AI-powered solutions. In the past three months, shares of C3.ai and Palantir Technologies have gained 11.8% and 55.9%, respectively.

BBAI’s Valuation Trend

BBAI stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 11.16X, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors. That said, in the long term, the valuation could move toward a premium, given the favorable market fundamentals backing the company’s revenue visibility.

Zacks Investment Research
Image Source: Zacks Investment Research

Notably, C3.ai and Palantir Technologies are currently trading at a forward 12-month P/S ratio of 6.81X and 71.99X, respectively.

Earnings Estimate Revision of BBAI

BBAI’s bottom-line estimates indicate a loss per share for 2025 and 2026. The estimated values have widened in the past 60 days to a loss per share of 41 cents and 21 cents, respectively. Although the estimated figures for 2025 and 2026 imply year-over-year growth, the downward revision indicates bearish analyst sentiments.

EPS Trend

Zacks Investment Research
Image Source: Zacks Investment Research

BBAI stock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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