DRS Stock Forecast & Price Target

Leonardo DRS Inc. exhibited strong financial performance, achieving total bookings of $1.3 billion for Q3/25, which represented a 24% year-over-year increase and propelled the company's backlog to a record $8.9 billion, an 8% year-over-year rise. The Advanced Sensing and Computing segment played a critical role, contributing to robust demand and delivering 34% topline growth within the Integrated Mission Systems segment, supported by consistent revenue from the Columbia Class submarine program. Furthermore, EBITDA margins demonstrated improvement, increasing 120 basis points year-over-year, reflecting enhanced operational leverage and profitability in air defense equipment and related programs.

Leonardo DRS Inc has reported a consolidated adjusted EBITDA margin of 12.2%, reflecting a year-over-year decline of 10 basis points due to increased research and development expenses, a less favorable revenue mix, and inefficient program execution, which are expected to continue as a drag on profits into 2026. Specifically, the Advanced Sensing and Computing (ASC) segment experienced a 100 basis points drop in adjusted EBITDA margins to 11%, largely driven by 80% of the company's R&D investment being directed here, which created a 150 basis points negative impact on margins in Q3. Additionally, ongoing challenges such as the Germanium supply chain issues further complicate the company's operational landscape, overshadowing the positive aspects of strong bookings and revenue growth.