Parsons Corp (PSN) Stock Forecast & Price Target

Parsons Corp is projected to experience margin expansion, with management targeting an increase of 30 basis points this year, following a 50 basis point improvement attributed to a confidential contract. The company is well-positioned to exceed industry organic growth rates over the next three years, driven by strong demand in Critical Infrastructure bookings, favorable hiring trends, and alignment of Federal Solutions with key defense and intelligence priorities. Additionally, improvements in Middle East and federal margins are anticipated in the latter half of the year, supported by incentive fee bookings and significant contract awards, which further underpin the company's positive growth outlook.

Parsons Corp faces significant risks that contribute to a negative outlook on its stock, including a reduction in the FY26E target EBITDA multiple from 17.6x to 15.8x, reflecting concerns about profitability. Key issues impacting the company include potential declines in federal budgets, increased competition for skilled labor leading to higher operational costs, and geopolitical tensions that could affect projects in the Middle East. Additionally, uncertainties surrounding government procurement changes, funding delays, and margin pressures from legacy program write-downs further complicate Parsons' growth prospects in both its Federal Solutions and Critical Infrastructure segments.