KeyBanc Capital Markets reduced its price target on Parsons Corp. (NYSE: PSN) to $73.00 from $80.00 on Thursday, while retaining an Overweight rating on the stock. The firm noted the new target is broadly in line with InvestingPro's Fair Value estimate and indicated that Parsons may be undervalued relative to that assessment at its current share price.
The adjustment comes after what KeyBanc termed a "difficult year" for Parsons, where results fell short of expectations and pressured the stock. Parsons shares have declined materially in recent trading - down 10.77% in the past week and about 33% below the 52-week high of $89.50 - with the company most recently trading at $60.25.
In its commentary, KeyBanc said it now views Parsons' forward guidance as "achievable" after the resolution of matters tied to a confidential contract and an FAA shortfall. The research team labeled the company’s guidance "prudent" and highlighted that returning to investor confidence will depend on consistent delivery in line with that guidance following what it described as "a year of contracting whiplash."
KeyBanc added that for Parsons to outperform the guidance it has issued, conditions within the Federal Solutions contracting environment will need to improve both on top-line growth and margins. That assessment places emphasis on government-related contract trends and margin dynamics in Parsons' federal business unit.
Parsons' most recent public results underscored the analyst concerns. The company reported fourth-quarter 2025 earnings per share of $0.75, missing the consensus of $0.7962. Revenue for the quarter came in at $1.6 billion versus expectations of $1.68 billion. The earnings and revenue shortfalls have been central to investor attention and were highlighted as key developments in the company’s recent reporting.
KeyBanc’s note and Parsons’ reported results together paint a picture of a company whose near-term performance is subject to the pace of recovery in its federal contracting markets and to its ability to execute on current contracts without further surprises. The research firm emphasized the need for steady operational performance to restore confidence after the recent volatility in results and shares.
Investors will likely watch guidance execution and any signs of improvement in the Federal Solutions contracting environment closely, as these factors were identified as the primary levers for Parsons to move beyond its recent setbacks.