What Happened?
Shares of government IT services provider Science Applications International Corporation (NASDAQ:SAIC) fell 7.5% in the afternoon session after the company announced that Chief Executive Officer Toni Townes-Whitley was stepping down, effective immediately.
The information technology and engineering services provider named board member James Reagan as interim CEO. The departure came as a surprise to some analysts, particularly since Townes-Whitley had been in the role for just over a year. While SAIC, a major government contractor, reaffirmed its financial guidance for fiscal year 2026, it also noted that a prolonged U.S. government shutdown could negatively affect its ability to meet those targets. The combination of an abrupt leadership change and external uncertainty appeared to worry investors.
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What Is The Market Telling Us
SAIC’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock dropped 13% on the news that the company announced weak first quarter 2025 (fiscal 2026) results which missed analysts' EPS estimates. The underwhelming result was due to sluggish revenue growth, which rose just 2% year on year, driven largely by volume increases in existing and new contracts, but weighed down by the completion of older contracts. Looking ahead, the company reaffirmed its full-year guidance for adjusted EPS and EBITDA, but both fell short of Wall Street estimates. Management pointed to strong bookings with a 1.3 book-to-bill ratio and high-profile wins like the U.S. Army contract, but those longer-term prospects likely didn't sway investors focused on profitability. Overall, it was a weak quarter.
SAIC is down 17.2% since the beginning of the year, and at $92.86 per share, it is trading 39.7% below its 52-week high of $154.10 from November 2024. Investors who bought $1,000 worth of SAIC’s shares 5 years ago would now be looking at an investment worth $1,225.
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