DRS Stock Forecast & Price Target

Leonardo DRS Inc has demonstrated a strong financial performance with total bookings reaching $1.3 billion, resulting in a record backlog of $8.9 billion, which reflects a year-over-year increase of 8%. The company's Advanced Sensing and Computing segment has been a key driver of growth, evidenced by a 24% year-over-year increase in new funded bookings during Q3/25, alongside robust demand in the Integrated Mission Systems segment that recorded a 34% top-line growth. Furthermore, EBITDA margins have improved significantly, with an increase of 120 basis points year-over-year due to operational leverage and enhanced profitability from critical programs, supporting a positive long-term outlook for the company.

Leonardo DRS Inc has reported a decline in its consolidated adjusted EBITDA margin to 12.2%, a decrease attributed to elevated research and development costs and less efficient program execution, which are expected to continue affecting profitability into 2026. The Advanced Sensing and Computing segment experienced a 100 basis point drop in its adjusted EBITDA margin to 11%, primarily due to increased R&D investments that have adversely impacted margins. Additionally, challenges in the Germanium supply chain present further pressure although the company is actively seeking solutions to mitigate this issue.