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On Wednesday, Goldman Sachs downgraded Booz Allen Hamilton stock, listed on the New York Stock Exchange (NYSE:BAH), from a Neutral to a Sell rating, setting a new price target of $94.00. The stock, currently trading at $109.81, has declined 14.5% in the past week. The move reflects the firm’s expectations of limited revenue and earnings growth for the company in the medium term, despite its 12.4% revenue growth over the last twelve months.
Stifel analysts indicated that the downgrade was driven by anticipated pressures on federal civilian spending and shifting priorities within the Department of Defense (DoD). They believe these factors could lead to relatively flat revenue growth for Booz Allen Hamilton in the coming years. According to InvestingPro data, five analysts have recently revised their earnings estimates downward for the upcoming period.
The analysts also expressed concerns about potential risks to the company’s profit margins due to changes in contract structures. This assessment is based on the current trading values of Booz Allen Hamilton, which are 17 times the price-to-earnings (P/E) and 12 times the earnings before interest, taxes, depreciation, and amortization (EBITDA) on the calendar year 2026 estimates (CY26E).
Goldman Sachs’ analysis suggests that these valuation levels have the potential to decrease if the company’s earnings do not show an upward trend. The firm’s stance implies a cautious outlook on the stock’s future performance, advising investors of the possible downside risks associated with Booz Allen Hamilton’s financial prospects.
In other recent news, Booz Allen Hamilton reported mixed financial results for the fourth quarter of fiscal year 2025. The company’s earnings per share met expectations at $1.61, but revenue fell short, coming in at $2.97 billion against a projected $3.03 billion. This revenue miss was significant, contributing to a 14.43% decline in the company’s premarket stock. Booz Allen Hamilton’s AI business showed robust growth, exceeding 30% and reaching approximately $800 million, while the company plans a 7% headcount reduction in the first quarter of fiscal year 2026.
The firm’s year-end backlog increased by 15% to $37 billion, indicating potential for future growth. UBS analyst Gavin Parsons (NYSE:PSN) maintained a Neutral rating on Booz Allen Hamilton stock, noting the company’s fiscal year 2026 revenue guidance of 0-4% fell short of expectations. Truist Securities also maintained a Hold rating, citing pressures faced by Civil agencies despite growth in the Defense and National Security segments. Meanwhile, Raymond (NSE:RYMD) James downgraded Booz Allen Hamilton’s stock from Outperform to Market Perform, highlighting a slowdown in organic growth and challenges in aligning with current U.S. administration priorities. These developments reflect the company’s mixed performance across its various segments and the challenges it faces moving forward.
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