Amentum Holdings Inc: 1Q26: Accelerating Backlog With Strong Bookings

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Amentum Holdings Inc: 1Q26: Accelerating Backlog With Strong Bookings

UpdateMCritical Digital Infrastructure (~30% of the portfolio). AMTM's expertise and

exposure in markets such as space and nuclear with clear, durable tailwinds give it

an advantage over Gov Services peers. Nevertheless, the portfolio combination of

assets (merger closed in Sept-2024) has yet to gain traction and accelerate revenue

growth. FY25 normalized organic revenue growth was 2.5% and 3% in 1H26 is well

below the company's potential. In order for AMTM to re-rate higher, we think it is

critical to accelerate revenue toward MSD organically.

Exhibit 1: Attractive Exposure to High Growth Nuclear, Space, and Critical Digital

Infrastructure Unique in the Gov Services Space

AMTM Revenue Split

~30% of Revenue from ~70% of Revenue from

high growth markets steady, legacy

businesses

~$10B (~70% of Revenue):

~$4B (~30% of

Defense sustainment and logistics,

Revenue):

environmental remediation, Intelligence, Nuclear Development, …

FedCivil

Source: Company Data, Morgan Stanley Research.

We are constructive on the asset mix and business, but prefer other names in

our coverage with less growth acceleration execution risk. Assume EW with a

positive posture and look for further growth acceleration traction to become more

constructive heading into 2027. While we are bullish on AMTM's asset mix,

execution risk and timing uncertainty on when AMTM can deliver on its growth

potential balance the upside case. AMTM trades toward the lower end of the

Government Services group, predominantly due to recent growth headwinds.

Zooming out, irrespective of recent performance, we think AMTM's assets and end

markets skew favorably against the Gov Services group and should be able to