Parsons Corporation
PSN
$49.05
+6.49%
Parsons Corporation is a technology-driven solutions provider serving the defense, intelligence, and critical infrastructure markets, delivering services such as engineering, design, and mission-critical project management. The company operates through two primary segments: Federal Solutions, which serves U.S. government clients, and Critical Infrastructure, which focuses on complex physical and digital infrastructure globally. Parsons holds a distinct competitive position as a high-end service provider with deep expertise in national security and infrastructure, differentiating itself through its technology integration and long-standing government relationships. Currently, the stock is under intense scrutiny following a dramatic 38% drop on July 29, 2026, triggered by guidance cuts for 2026, despite a solid Q2 beat and growing backlog, creating a debate between contrarian value investors and those concerned about growth sustainability.…
PSN
Parsons Corporation
$49.05
Related headlines
Investment Opinion: Should I buy PSN Today?
Rating: Hold. The consensus is a 'buy' with an average target of $60.09, but the recent guidance cut and declining revenue warrant caution. The thesis is that PSN is a quality defense/infrastructure player with a strong backlog, but the near-term growth is uncertain, and the stock is in a downtrend.
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PSN 12-Month Price Forecast
The AI assessment is neutral with medium confidence. The stock is trading at a low forward PE, but the negative revenue growth and high PEG ratio suggest that the market is pricing in a recovery that may not materialize. The analyst consensus is bullish, but the recent guidance cut has increased uncertainty. I would upgrade to bullish if revenue growth turns positive and the company meets or beats guidance, and downgrade to bearish if the company cuts guidance again or if the backlog shrinks.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Parsons Corporation's 12-month outlook, with a consensus price target around $58.55 and implied upside of +19.4% versus the current price.
Average Target
$58.55
0 analysts
Implied Upside
+19.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$48 - $72
Analyst target range
Parsons has coverage from 11 analysts, with a consensus recommendation of 'buy' and a mean rating of 1.86 (where 1 is strong buy and 5 is sell). The average target price is $60.09, implying a +35.9% upside from the current price of $44.21, indicating a bullish consensus despite recent turmoil. The target range spans from a low of $48.00 to a high of $72.00, with the low still above the current price, suggesting that even the most bearish analyst sees some upside. The high target of $72 implies a 62.8% upside, likely assuming a successful execution of the backlog and margin recovery, while the low target of $48 may reflect concerns about continued revenue declines or margin compression. Recent ratings have been predominantly positive, with UBS, KeyBanc, and Citigroup reiterating Buy/Overweight ratings in early 2026, though the July 29 drop may prompt revisions.
Bulls vs Bears: PSN Investment Factors
The bull case for PSN rests on a compelling valuation (forward PE 12.7x), a strong backlog, and analyst consensus of 36% upside, while the bear case is driven by declining revenue, a guidance cut that shattered confidence, and a high PEG ratio. Currently, the bearish evidence is stronger given the negative revenue trend and the recent 38% drop, but the low forward PE and backlog growth offer a potential contrarian opportunity. The most critical tension is whether the revenue decline is temporary (backlog conversion) or structural (loss of contracts), which will determine if the stock is a value trap or a recovery play.
Bullish
- Analyst consensus bullish with 36% upside: 11 analysts rate PSN a 'buy' with a mean rating of 1.86 and an average target of $60.09, implying +35.9% upside from the current $44.21. Even the lowest target of $48 is 8.6% above the current price, indicating that the sell-side sees limited downside.
- Forward PE of 12.7x offers value: The forward PE of 12.7x is a steep discount to the trailing PE of 27.3x, implying the market expects a significant earnings recovery. If EPS reaches the analyst estimate of $4.01, the stock trades at a reasonable multiple for a defense/tech services firm.
- Strong backlog and contract wins: Parsons recently won a key oversight contract for a $1.1-$1.4 billion bridge project, and the company reported a solid Q2 beat with growing backlog. This provides revenue visibility that could support a recovery from the current revenue decline.
- Low beta and positive free cash flow: With a beta of 0.658, PSN is less volatile than the market, offering defensive characteristics. The company generated $410 million in trailing free cash flow, providing financial flexibility to weather the current downturn.
Bearish
- Revenue declining YoY: Q4 2025 revenue fell 7.5% YoY to $1.604 billion, marking a reversal from prior growth. The trend is negative, with sequential declines from $1.734 billion in Q4 2024, raising concerns about the company's growth trajectory.
- 38% stock drop on guidance cut: On July 29, 2026, PSN plunged 38% after cutting 2026 guidance, despite a Q2 beat. This dramatic de-rating reflects deep investor disappointment and suggests that management's credibility is now in question.
- High PEG ratio of 12.1x: The PEG ratio of 12.1x indicates that the stock is expensive relative to its growth rate, which is currently negative. This suggests that the market is pricing in a recovery that may not materialize, making the stock vulnerable to further de-rating.
- Severe underperformance vs. market: PSN has underperformed the S&P 500 by 58.6% over the past year, with a 1-year price change of -40.4%. The stock is trading near its 52-week low of $36.26, reflecting persistent selling pressure and negative investor sentiment.
PSN Technical Analysis
Parsons' stock is in a pronounced downtrend, with a 1-year price change of -40.4% and a 6-month change of -36.9%, reflecting sustained selling pressure. The current price of $44.21 sits at 15.4% of its 52-week range (between $36.26 low and $89.50 high), near the lows, indicating a bearish posture and potential value trap or oversold condition. The stock's beta of 0.658 suggests it is less volatile than the market, but the relative strength versus SPY is deeply negative, with a 1-year relative strength of -58.6%, underscoring significant underperformance.
Beta
0.69
0.69x market volatility
Max Drawdown
-54.8%
Largest decline past year
52-Week Range
$36-$90
Price range past year
Annual Return
-37.6%
Cumulative gain past year
| Period | PSN Return | S&P 500 |
|---|---|---|
| 1m | -14.8% | +2.5% |
| 3m | -8.7% | +2.7% |
| 6m | -25.1% | +11.1% |
| 1y | -37.6% | +20.5% |
| ytd | -21.2% | +12.3% |
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PSN Fundamental Analysis
Parsons' revenue trajectory has turned negative, with the most recent quarter (Q4 2025) showing revenue of $1.604 billion, a YoY decline of -7.5%, marking a reversal from prior growth. The multi-quarter trend shows sequential declines from $1.734 billion in Q4 2024 to $1.604 billion in Q4 2025, with the Q3 2025 revenue at $1.622 billion, indicating a deceleration. The Federal Solutions segment contributed $784 million and Critical Infrastructure $820 million in the latest quarter, with the latter slightly larger, but both appear to be facing headwinds. This revenue contraction raises concerns about the company's ability to grow, though the backlog growth mentioned in news may provide future support.
Quarterly Revenue
$1.6B
2025-12
Revenue YoY Growth
-7.5%
YoY Comparison
Gross Margin
23.0%
Latest Quarter
Free Cash Flow
$410412000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is PSN Overvalued?
Given that Parsons has positive net income (net income of $55.6 million in Q4 2025), the PE ratio is the primary valuation metric. The trailing PE is 27.3x, while the forward PE is 12.7x, a significant discount that implies the market expects earnings to more than double, likely due to the guidance cuts and recovery expectations. The PS ratio is 1.04x, which is low for a tech services firm, but the PEG ratio of 12.1x suggests the stock is expensive relative to its growth rate, which is currently negative. Compared to the industry average (not provided), the PE is difficult to benchmark, but the forward PE of 12.7x appears reasonable if earnings recover as expected.
PE
27.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 12x~61x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are significant: revenue declined 7.5% YoY in Q4 2025, and the company's net margin is only 3.8%, leaving little room for error. The debt-to-equity ratio of 0.56 is moderate, but the high PEG of 12.1x implies that the market expects growth that may not materialize, and any further earnings disappointment could trigger another sell-off. Free cash flow of $410 million provides some cushion, but the negative revenue trend could pressure cash generation if it persists.
FAQ
The key risks are: 1) Financial risk: revenue declined 7.5% YoY, and the net margin is only 3.8%, leaving little room for error. 2) Competitive risk: intense competition from larger defense and infrastructure players. 3) Macro risk: defense budget uncertainty and potential government shutdowns. 4) Company-specific risk: the recent guidance cut has damaged credibility, and any further cuts could trigger another sell-off. The most severe risk is a continued revenue decline, which could push the stock to its 52-week low of $36.26, a -18% downside.
The 12-month forecast is mixed: the bull case (25% probability) targets $60-$72, the base case (50% probability) targets $48-$60, and the bear case (25% probability) targets $36-$48. The most likely scenario is the base case, where the stock stabilizes and gradually recovers to the analyst average target of $60.09. This assumes that the company meets its lowered guidance and that revenue growth returns to low single digits. If the company fails to execute, the stock could fall to the 52-week low.
PSN is trading at a forward PE of 12.7x, which is below the market average and appears undervalued if earnings recover to the analyst estimate of $4.01. However, the trailing PE of 27.3x and the PEG ratio of 12.1x suggest that the stock is expensive relative to its current growth rate, which is negative. The PS ratio of 1.04x is low for a tech services firm, but the market is pricing in a recovery that may not happen. Overall, the stock is fairly valued relative to its forward earnings, but the negative growth and high PEG indicate that it is not a bargain.
PSN is a potential contrarian buy for investors with a high risk tolerance, given the 35.9% upside to the average analyst target of $60.09. However, the stock is in a downtrend, and the recent guidance cut has created significant uncertainty. The forward PE of 12.7x is attractive if earnings recover, but the negative revenue growth and high PEG ratio of 12.1x are red flags. It is a good buy only if you believe the backlog will convert to revenue and the company can stabilize its growth. For conservative investors, it may be better to wait for a clearer sign of a turnaround.
PSN is more suitable for long-term investment, given its low beta of 0.658 and the potential for a multi-year recovery in defense and infrastructure spending. The stock is currently in a downtrend, and short-term trading is risky due to high volatility and negative momentum. A minimum holding period of 12-18 months is recommended to allow the company to execute on its backlog and for the market to re-rate the stock. The lack of a dividend means that investors rely on capital appreciation, which requires patience.