US stock futures steady with China trade talks, Q3 earnings in focus
Investing.com - TD Cowen downgraded Booz Allen Hamilton (NYSE:BAH) from Buy to Hold on Friday, while reducing its price target to $105.00 from $125.00. The stock, currently trading near its 52-week low at $97.28, appears undervalued according to InvestingPro analysis, despite maintaining strong fundamentals with a P/E ratio of 12.02 and revenue growth of 9.25% over the last twelve months.
The research firm cited a challenging macroeconomic environment for government services firms as the primary reason for the downgrade, noting that the Department of Government Efficiency (DOGE) maintains its savings-focused approach despite Elon Musk’s formal departure from the initiative in May.
TD Cowen’s channel checks revealed that the government fiscal year-end budget "flush" in September was less robust compared to previous years, indicating tightening federal spending patterns.
The ongoing government shutdown, which analysts suggest may extend beyond a month, creates additional uncertainty, with TD Cowen noting it will likely be followed by a continuing resolution rather than a formal fiscal 2026 budget, limiting sector growth and bookings.
The firm also expressed concern that potential federal worker layoffs could hamper the pace of bookings, sales, and free cash flow recovery once the shutdown concludes, suggesting that management commentary will likely remain subdued or cautious in upcoming quarterly reports.
In other recent news, Booz Allen Hamilton reported its Q1 2026 earnings, exceeding earnings per share (EPS) expectations with $1.48 against a forecast of $1.46. However, the company missed revenue projections, reporting $2.92 billion compared to the expected $2.97 billion. Additionally, Booz Allen Hamilton secured a significant five-year task order valued at $1.58 billion to provide intelligence analysis related to countering weapons of mass destruction. This contract will support the Defense Intelligence Agency and the Defense Threat Reduction Agency. Analysts have also made adjustments to their price targets for Booz Allen Hamilton. UBS raised its price target to $119 from $115, citing concerns about the company’s backlog and hiring trends. Similarly, Stifel increased its price target to $119 from $112, noting a cash upside despite revenue falling slightly below estimates. These developments reflect ongoing investor interest and scrutiny regarding Booz Allen Hamilton’s financial performance and strategic initiatives.
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