DRS Stock Forecast & Price Target

Leonardo DRS Inc. has demonstrated strong financial performance with total bookings reaching $1.3 billion in Q3/25, resulting in a 1.4x book-to-bill ratio year-to-date and an impressive backlog of $8.9 billion, reflecting an 8% year-over-year increase. The company’s Integrated Mission Systems segment exhibited notable growth, contributing $383 million to the topline, which reflects a 34% increase, driven by strong demand in short-range air defense and the Columbia Class submarine program. Furthermore, EBITDA margins improved by 120 basis points year-over-year, supported by operational efficiencies and program performance, positioning the company favorably for future profitability and growth.

Leonardo DRS Inc. has experienced a decline in its consolidated adjusted EBITDA margin, which fell to 12.2%, down 10 basis points year-over-year, primarily influenced by increased research and development (R&D) costs and challenges in program execution. The company's Advanced Sensing and Computing (ASC) segment reported an adjusted EBITDA margin of 11%, a decrease of 100 basis points year-over-year, mainly due to heightened R&D spending that exerted a 150 basis point drag on margins. Additionally, the ongoing challenges in the Germanium supply chain pose a substantial risk to the company's operations, further exacerbated by reliance on foreign sources, which could hinder future profitability.