DRS Stock Forecast & Price Target

Leonardo DRS Inc. has demonstrated impressive growth, with total bookings of $1.3 billion in Q3/25 resulting in a record backlog of $8.9 billion, marking an 8% increase year-over-year. The Integrated Mission Systems segment notably contributed to this growth with a 34% rise in topline revenue, driven by strong demand for short-range air defense and the Columbia Class submarine program. Furthermore, the company's EBITDA margins improved by 120 basis points year-over-year, reflecting operational efficiency and enhanced profitability in their electric power and propulsion technologies.

Leonardo DRS has experienced a decline in its consolidated adjusted EBITDA margin to 12.2%, reflecting a 10 basis point year-over-year drop, primarily due to increased R&D costs and less efficient program execution. Within the Advanced Sensing and Computing segment, adjusted EBITDA margins fell to 11%, a 100 basis point decrease year-over-year, largely attributed to elevated R&D investments that have significantly pressured profitability. These factors, combined with ongoing challenges in the Germanium supply chain and delayed program execution, create a negative outlook for the company's financial performance moving forward.