DRS Stock Forecast & Price Target

Leonardo DRS Inc. reported total bookings of $1.3 billion in Q3/25, marking a 24% year-over-year increase, which significantly contributed to a record backlog of $8.9 billion, up 8% from the previous year. The company's Advanced Sensing and Computing segment continues to drive revenue, benefiting from robust demand in the Integrated Mission Systems sector, where segment revenue grew by 34% year-over-year. Furthermore, EBITDA margins improved by 120 basis points year-over-year, reflecting enhanced operational leverage and profitability in key defense programs, positioning the company favorably for continued growth.

Leonardo DRS is facing a negative outlook primarily due to its declining profitability, with the consolidated adjusted EBITDA margin dropping by 10 basis points year-over-year to 12.2%, impacted by increased R&D expenditures and less efficient program execution. The Advanced Sensing and Computing segment experienced a further contraction in margins, down 100 basis points to 11%, largely driven by a substantial allocation of R&D investments impacting overall profitability. Additionally, ongoing challenges in the Germanium supply chain are expected to persist, adding pressure on the company's operations as it seeks to mitigate reliance on external sources.