Analysts Tread Carefully on BigBear.ai (BBAI) Stock Amid Weak Outlook
TipRanks
March 17, 2025
BigBear.ai (BBAI) stock has experienced a 16% decline since the company announced its Q4 2024 results, which missed expectations, along with a less-than-optimistic outlook for the future. The company, which provides AI-powered decision intelligence solutions to commercial and government clients, saw an 8% revenue increase in Q4 2024. However, it fell short of analysts’ projections and reported a larger-than-anticipated loss for the quarter. Given the uncertainties surrounding BigBear.ai’s performance, macroeconomic pressures, and the weak outlook, Wall Street analysts are adopting a cautious approach to BBAI stock.
BigBear.ai’s stock initially rose with the announcement of the Stargate project by the U.S. government, which was intended to support the ongoing AI wave. However, government spending cuts, macroeconomic challenges, tariff wars, and the disappointing Q4 results have contributed to a 21% year-to-date decline. Despite these headwinds, BBAI stock has increased approximately 45% over the past year, benefiting from broader AI market trends.
BBAI’s Outlook Raises Concerns
BigBear.ai anticipates its 2025 revenue to be in the range of $160 million to $180 million, with an adjusted EBITDA loss in the single-digit millions. However, these key figures were below the analysts’ estimates of $190 million in revenue and adjusted EBITDA of $3.9 million. This guidance miss comes despite the company’s backlog of $418 million at the end of 2024, which represents a $250 million increase compared to the previous year. Following these results, the company also announced a 3.5-year, $13.2 million contract from the U.S. Department of Defense (DoD) to support the Chairman of the Joint Chiefs of Staff’s (CJCS) Directorate for Force Management (J-35). However, concerns about BigBear’s outlook have increased due to the company’s 2024 revenue guidance miss, leading to questions about its execution. Moreover, the U.S. government is reducing spending through the Department of Government Efficiency (DOGE). Cash burn and shareholder dilution due to capital raises negatively affect investors.
Wall Street Exercises Caution on BBAI Stock
Recently, Northland analyst Michael Latimore downgraded BigBear.ai stock from Buy to Hold, but increased the price target to $4 from $2.50. Latimore cited the time needed for the new CEO to implement plans to foster consistent growth. BBAI’s reliance on government contracts also influenced the analyst’s decision. H.C. Wainwright analyst Scott Buck maintained a Buy rating on BBAI stock but reduced his price target to $6 from $7, as he expects the stock to face pressure due to the Q4 revenue miss and subdued guidance for 2025. Buck believes the AI play’s long-term optimism is intact. The 2025 revenue guidance suggests a modest growth of 7.4% at the midpoint. Buck noted that softer expectations for 2025 could be due to possible delays and disruptions as the federal government transitions to a new administration. The analyst expects that BigBear.ai will benefit from increased investment due to its presence in markets such as border security, defense, intelligence, and critical infrastructure. Buck also expects BBAI to be a net beneficiary of DOGE as a government efficiency enabler. Buck also noted BigBear.ai’s efforts to reduce its debt through multiple initiatives, including warrant conversions and the exchange of convertible notes. With $115 million in cash and an improved debt-to-cash ratio of 1.2x as of the end of Q4 2024, Buck believes this removes a “meaningful headwind to BBAI shares.”
Is BBAI Stock a Buy, Sell, or Hold?
Wall Street analysts are cautiously optimistic. The consensus rating for BBAI is Moderate Buy, based on two Buy ratings and two Hold ratings. The average BBAI stock price target is $5.33, indicating a potential upside of approximately 51%.
