DRS Stock Forecast & Price Target

Leonardo DRS Inc. demonstrated strong financial performance with total bookings of $1.3 billion in Q3/25, achieving a year-to-date business-to-business ratio of 1.4x and increasing total backlog to a record $8.9 billion, reflecting an 8% year-over-year growth. The Integrated Mission Systems segment excelled, posting a 34% revenue growth, supported by significant demand for counter-unmanned aircraft systems and the steady revenue stream from the Columbia Class submarine program. Additionally, the company achieved a year-over-year increase in EBITDA margins, which rose by 120 basis points, attributed to operational leverage and enhanced profitability from its electric power and propulsion segment.

Leonardo DRS Inc. is experiencing a decline in its consolidated adjusted EBITDA margin, which fell to 12.2%, attributed to increased research and development expenses, a less favorable business mix, and inefficiencies in program execution. The Advanced Sensing and Computing segment has reported a significant drop in adjusted EBITDA margins to 11%, primarily due to elevated R&D investments, which are expected to continue to suppress profits through 2026. Additionally, the company faces ongoing challenges related to the Germanium supply chain, posing further risks to its operational efficiency and overall financial performance.