BigBear.ai stock is rocketing higher on exciting new contract news. But are investors getting ahead of themselves?
BigBear.ai (BBAI 27.07%) stock is surging Wednesday. The company’s share price was up 29% as of 2:30 p.m. ET, according to data from S&P Global Market Intelligence. Shares had been up as much as 47.4% earlier in the day’s trading.
After the market closed yesterday, BigBear published a press release announcing that it had landed a new contract. The software specialist will be providing services to Concept Solutions — a private company that was recently awarded a contract with the Federal Aviation Authority (FAA).
BigBear stock rockets higher on new deal
News that BigBear will be providing services to the FAA as a subcontractor is spurring a big upswing for the company’s market capitalization. As per the press release, Concept Solutions is one of 14 companies that has been awarded new contracts with the FAA. The new contracts could be worth as much as $2.4 billion over the next decade. In a subcontracting role, BigBear will help Concept Solutions manage information systems, provide administrative support, and assist with financial and security programs for the FAA.
BigBear stock has seen very volatile trading across 2024. Even with today’s big pop, the company’s share price is still down roughly 19% year to date and 60% from the 52-week high it reached in March.
What comes next for BigBear.ai?
With its latest quarterly report, BigBear issued guidance for sales to come in between $165 million and $180 million this year. Meanwhile, the average analyst estimate had expected the business to post sales of roughly $199 million prior to the guidance update. BigBear stock lost ground following the Q2 report due to weak guidance, but the recently announced new deal with Concept Solutions and the FAA suggests that the company’s revenue outlook over the next decade may actually be significantly better than previously anticipated.
On the other hand, it’s still not exactly clear to what extent the deal with Concept Solutions will be a sales driver for BigBear. The stock’s comeback rally could continue, but investors should keep in mind that performance visibility is still limited — and shares look riskier after today’s surge.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.