Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 12 May, 25 | BBAI | Speculative Buy | USD 3.16 | USD 3.4 | USD 3.8 | 1 day | 20.3% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
BigBear.ai Holdings, Inc. provides artificial intelligence-powered decision intelligence solutions. It offers national security, supply chain management, and digital identity and biometrics solutions. The company also provides data ingestion, data enrichment, data processing, artificial intelligence, machine learning, predictive analytics, and predictive visualization solutions and services. It serves nation defense and intelligence agencies, border protection, transportation security, manufacturing, distribution and logistics, travel, entertainment, and tourism sectors. The company is headquartered in Columbia, Maryland.
Cash balance increased to USD 107.6 million, supported by USD 64.7 million in proceeds from warrant exercises and debt reduction of USD 58 million
Revenue grew 5% year-over-year to USD 34.8 million in Q1 2025
SG&A expenses rose significantly by 34% year-over-year, reaching USD 22.7 million in Q1 2025
Adjusted EBITDA deteriorated to USD (7.0) million in Q1 2025 from USD (1.6) million in Q1 2024.
BigBear.ai faces concentrated exposure to government contracts, making it vulnerable to funding delays and shifts in public sector procurement priorities
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 3.16 | 2.85 | 3.4 | 3.8 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Revenue Growth and Business Momentum
BigBear.ai Holdings, Inc. (NYSE: BBAI), a provider of AI-powered decision intelligence solutions, reported revenue of USD 34.8 million for the first quarter of 2025, marking a 5% year-over-year increase compared to USD 33.1 million in the same quarter of 2024. This growth was primarily attributed to additional revenue from contracts awarded by the Department of Homeland Security and in the area of Digital Identity. The company noted early signs of positive traction in its strategic initiatives, particularly in sectors where it has strong relationships and proven technological capabilities.
Gross Margin Stability and Profitability Challenges
The company's gross margin remained relatively stable at 21.3% for the first quarter of 2025, compared to 21.1% in the prior-year period. However, BigBear.ai continued to report a net loss, albeit significantly reduced to USD 62.0 million from USD 127.8 million in the first quarter of 2024. The year-over-year improvement in net loss was primarily due to the absence of a one-time goodwill impairment charge of USD 85.0 million recorded in Q1 2024. This was partially offset by increased non-cash losses from changes in derivative fair value, a USD 2.6 million non-cash loss from debt extinguishment, and a USD 2.2 million rise in equity-based compensation expenses.
Adjusted EBITDA and Operating Expense Trends
On a non-GAAP basis, Adjusted EBITDA stood at USD (7.0) million for the first quarter of 2025, compared to USD (1.6) million for the same period in 2024. The decline was primarily driven by increased research and development spending and higher recurring selling, general, and administrative (SG&A) expenses. The increase in recurring SG&A was linked to government funding delays, which resulted in underutilized resource capacity.
SG&A Growth and Pangiam Integration Costs
Total SG&A expenses rose to USD 22.7 million in Q1 2025 from USD 16.9 million in Q1 2024, with recurring SG&A rising to USD 17.7 million from USD 13.6 million year-over-year. The increases reflect the full impact of Pangiam’s operational costs and headcount, which were not fully present in the prior-year period as the acquisition closed on March 1, 2024. Additionally, delays in government funding have increased the company’s carrying costs, further pressuring operating margins.
Capital and Liquidity Position
BigBear.ai reported a cash balance of USD 107.6 million as of March 31, 2025. The company strengthened its liquidity during the quarter by raising USD 64.7 million in gross proceeds from the exercise of 2024 warrants and concurrently issued 3.77 million new warrants at an exercise price of USD 9.00 per share. Furthermore, the company reduced its long-term debt by USD 58 million through voluntary conversions of its 2029 convertible notes, demonstrating a proactive approach to balance sheet management.
Backlog and 2025 Guidance
The company ended the first quarter with a backlog of USD 385 million, indicating strong future revenue visibility. BigBear.ai reaffirmed its full-year 2025 financial outlook, projecting revenue between USD 160 million and USD 180 million and Adjusted EBITDA in the negative single-digit millions. The management reiterated its focus on disciplined execution and strategic alignment with high-value government and defense sectors.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Speculative Buy’ recommendation has been given on BigBear.ai, Inc (NYSE: BBAI) at the closing market price of USD 3.16, as on May 09, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Information Technology Services
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| BBAI BigBearai Holdings Inc |
0.33 9.15% | 3.88 | - | - | 6.36 | 10.02 | 7.27 | -3.2576 |
| ACN Accenture plc |
0.81 0.25% | 320.99 | 31.75 | 28.09 | 3.49 | 7.94 | 3.45 | 20.00 |
| IBM International Business Machines |
-3.37 1.26% | 263.58 | 32.79 | 20.83 | 3.32 | 8.50 | 4.06 | 20.10 |
| FI Fiserv, Inc. |
-2.71 1.63% | 163.16 | 28.20 | 15.58 | 4.24 | 2.70 | 5.45 | 13.13 |
| INFY Infosys Ltd ADR |
0.09 0.47% | 18.32 | 25.55 | 22.78 | 4.20 | 8.01 | 4.10 | 15.87 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 09,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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