What Happened?
Shares of government and sustainable technology solutions company KBR (NYSE: KBR) jumped 4.3% in the morning session after the company announced a plan to spin off its Mission Technology Solutions (MTS) segment into a separate, publicly traded company.
The board of directors unanimously approved the tax-free spin-off, which aimed to create two distinct companies. The remaining KBR business planned to focus on its Sustainable Technology Solutions unit, while the new, spun-off entity would consist of the government services segment, which dealt with national security and space applications. The company stated that this separation would provide both businesses with greater strategic focus, operational independence, and financial flexibility. This move was intended to help deliver long-term growth and value for shareholders. The completion of the spin-off was targeted for mid-to-late 2026.
After the initial pop the shares cooled down to $49.75, up 4% from previous close.
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What Is The Market Telling Us
KBR’s shares are not very volatile and have only had 7 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 9 months ago when the stock gained 7.8% on the news that The Wall Street Journal reported that activist investor Irenic Capital Management had built a stake in KBR and is urging the company to spin off its private sector business.
This move is noteworthy given that activist investors often bring about significant changes in targeted companies, focusing on improving asset monetization, expense efficiency, and stock buybacks.
KBR is down 14.1% since the beginning of the year, and at $49.75 per share, it is trading 30.9% below its 52-week high of $72.02 from November 2024. Investors who bought $1,000 worth of KBR’s shares 5 years ago would now be looking at an investment worth $2,272.
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