BigBear.ai (BBAI 10.22%) stock is posting big gains in Monday's trading despite sell-offs for the broader market. The software company's share price was up 16.2% as of 3:15 p.m. ET, while the S&P 500 index and the Nasdaq Composite index were both down 0.8%.
BigBear.ai stock is surging today thanks to bullish coverage from H.C. Wainwright. The firm's lead analyst on the company reiterated a buy rating and raised his one-year price target on the stock from $3 per share to $7 per share.
BigBear.ai stock surges on new price target
Before the market opened today, H.C. Wainwright published new coverage on BigBear.ai stock. As of this writing, analyst Scott Buck's new one-year price target of $7 per share implies additional upside of 40%.
Buck is bullish on the company's move to refinance convertible senior notes worth $182.3 million, pushing the maturity date from 2026 to 2029. With the move, BigBear is minimizing near-term liquidity issues and giving itself more flexibility to spend on growth bets. The analyst also sees BigBear benefiting from a market environment that is becoming more favorable to growth stocks with smaller market caps and thinks the company's status as an artificial intelligence (AI) pure play can help support a premium valuation.
What comes next for BigBear.ai?
With today's gains, BigBear stock is now up 129% across 2024's trading. The share price gains and new stock offerings have pushed its market cap up to $1.2 billion. The company is now valued at roughly 7.3 times this year's expected sales.
BBAI Market Cap data by YCharts.
With its third-quarter report, BigBear grew its sales 22% year over year to reach $41.5 million. On the other hand, the company noted that it was seeing some cautiousness from government customers when it came to AI spending. While the stock may be able to keep rallying, the company may need to deliver more bullish contract guidance or accelerating sales growth with its next quarterly report in order to support recent share price gains.
