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On Monday, Raymond (NSE:RYMD) James downgraded Booz Allen Hamilton stock (NYSE:BAH) from Outperform to Market Perform. The decision followed the company’s disappointing financial results and outlook released earlier in the day, sending the stock down 16.3% over the past week. According to InvestingPro data, the stock is now trading near its 52-week low of $101.05, having declined over 27% in the past six months. Analysts at Raymond James cited several factors for the downgrade, including a significant slowdown in organic growth and challenges in aligning with the priorities of the current U.S. administration.
Booz Allen Hamilton, known for its consulting services to the U.S. government, faced tough comparisons with the previous year. The company’s organic growth rate is expected to decelerate from approximately 12% last year to around 3% this year. This slowdown is attributed to a heavier mix of civil government work and difficult comparative figures from the prior year’s performance. Despite these challenges, InvestingPro analysis shows the company maintains strong fundamentals with a "GREAT" financial health score and has consistently maintained dividend payments for 14 consecutive years.
The analysts also noted that Booz Allen Hamilton’s profit margins are under pressure due to continued investments in areas of long-term growth. Additionally, the company’s backlog, a key indicator of future revenue, showed signs of negative churn, with de-bookings and adjustments for expired performance periods contributing to concerns.
In light of these challenges, Raymond James has adjusted its financial estimates for Booz Allen Hamilton for fiscal years 2026 and 2027. The revised outlook suggests that the stock may revisit its lows from late February. The downgrade reflects the analysts’ expectations that the stock will face headwinds in the near term as the company navigates through the highlighted challenges.
In other recent news, Booz Allen Hamilton reported mixed financial results for its fourth quarter of fiscal year 2025. The company’s earnings per share (EPS) met expectations at $1.61, but revenue fell short, reaching $2.97 billion against a forecast of $3.03 billion. The company announced a 7% reduction in headcount planned for the first quarter of 2026, indicating potential challenges in its civil business. Additionally, Booz Allen Hamilton’s AI sector showed robust growth, with a 30% increase contributing significantly to the overall revenue. The firm’s year-end backlog increased by 15% to $37 billion, suggesting a strong pipeline for future projects. Looking ahead, Booz Allen Hamilton projects revenue between $12 billion and $12.5 billion for fiscal year 2026, with anticipated growth acceleration in the latter half of the year. Analysts have noted the company’s strategic focus on defense and intelligence, with expected slower growth initially. Despite the revenue miss, Booz Allen Hamilton’s adjusted EBITDA grew by 12% to $1.315 billion for the fiscal year.
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