DRS Stock Forecast & Price Target

Leonardo DRS Inc. reported a significant increase in total bookings, reaching $1.3 billion for Q3/25, representing a year-over-year growth of 24% and a quarter-over-quarter rise of 53%, which has bolstered the company's total backlog to a record $8.9 billion, up 8% year-over-year. The Advanced Sensing and Computing segment continues to drive revenue, evidenced by a standout performance in the Integrated Mission Systems segment, which achieved 34% topline growth and positive EBITDA margin expansions due to operational leverage and increased demand for air defense and submarine programs. Additionally, with anticipated margin improvements from the Columbia program and a new manufacturing facility slated for 2026, the company is well-positioned for future growth and profitability enhancement.

Leonardo DRS Inc.'s financial performance shows concerning trends, with a consolidated adjusted EBITDA margin of 12.2%, which represents a year-over-year decline due to increased R&D expenses and less efficient program execution. The Advanced Sensing and Computing (ASC) segment specifically experienced a 100 basis point reduction in adjusted EBITDA margins to 11%, driven largely by a significant allocation of R&D investments that hampered profitability. Additionally, overall EBITDA for the company lagged expectations by 2.2%, indicating margin contraction and persistent challenges with supply chain pressures related to Germanium.