V2X Inc.: A Fortified Defense Play with $1.3B in Backlog and Untapped Upside

V2X Inc. (NYSE: VVX) is positioning itself as a pillar of U.S. military readiness through two landmark contracts—the $921 million BEST MAC and $379 million LTRaC programs—that collectively form a $1.3 billion revenue engine extending to 2035. These contracts, which amplify its training solutions backlog to $12.5 billion, are now being underappreciated by the market. With shares trading at just 0.4x its backlog and 12.3x forward EBITDA, investors have a rare opportunity to buy a leader in a secular growth sector at a discount. Here’s why V2X is a must-buy for defense investors.

The Backlog Advantage: Predictable Cash Flow to 2035

V2X’s contracts with the U.S. Army are not one-off wins—they’re the foundation of a decade-long revenue stream. The BEST MAC contract, with its $921 million ceiling, ensures V2X remains the prime contractor for upgrading the Army’s Tactical Engagement Simulation Systems (TESS), the backbone of live-fire training exercises. Meanwhile, the LTRaC contract commits the company to modernizing live training ranges and instrumentation systems through 2033. Together, these contracts add $1.3 billion in potential revenue to a backlog already at $12.5 billion (including $2.3 billion in funded work).

The indefinite-delivery, indefinite-quantity (IDIQ) structure of BEST MAC means task orders will trickle in steadily, shielding V2X from quarterly volatility. As CEO Jeremy Wensinger notes, “This contract perfectly complements our $3.7 billion Warfighter-Training Readiness Solutions program, reinforcing our role in Army readiness.”

AI-Driven Competitive Edge: Outpacing the Status Quo

V2X’s moat isn’t just its contracts—it’s its AI and machine learning integration, which reduces training costs and improves realism. For instance, its systems can simulate enemy tactics in real time, allowing soldiers to practice against evolving threats. This tech edge is why the Army selected V2X over rivals for BEST MAC, and why the company’s backlog has grown 28% since 2022.

The payoff is clear: V2X’s adjusted EBITDA margin rose to 6.5% in 2024, despite macroeconomic headwinds. Competitors like L3Harris and Raytheon face higher execution risks, while V2X’s focus on training—a sector growing at 6% annually—gives it a niche.

Indo-Pacific Growth: A 10% Tailwind Ignored by the Market

The company’s 10% year-over-year revenue growth in the Indo-Pacific region is a silent catalyst. Contracts like the $62 million Space Force radar system in Alaska and upgrades to the Navy’s C-26 aircraft directly support U.S. deterrence in the region. Yet V2X’s stock trades at just $1.3 billion market cap, far below the value of its backlog and growth trajectory.

Undervalued at $1.3B Market Cap

Analysts at BTIG have a $80 price target (implying 140% upside from current levels), citing V2X’s backlog visibility and AI-driven moat. At current prices, the stock trades at 0.4x backlog and 12.3x forward EBITDA, a discount to peers trading at 14-16x EBITDA. Even if V2X delivers only half its backlog over five years, the math still favors a $80+ price.

Risks, But They’re Manageable

Contract delays or geopolitical shifts could disrupt revenue timing, but V2X’s diversified backlog (Army, Space Force, international clients) mitigates this. The U.S. has prioritized readiness spending, with the Army’s Synthetic Training Environment budget set to grow 12% through 2027.

Verdict: Buy V2X Before the Market Catches On

V2X is a rare combination of long-term revenue certainty, technology leadership, and geopolitical tailwinds—all at a valuation that ignores its backlog and growth. With $1.3 billion in contracts alone and a 10% growth engine in the Indo-Pacific, this is a stock primed to outperform. Investors should act now before the buy signal becomes a sprint.

Rating: Buy
Price Target: $80 (59% upside)