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On Tuesday, shares of Booz Allen Hamilton (NYSE:BAH) experienced a sharp 16.9% weekly decline following the release of lower-than-expected fourth-quarter EBITDA results of $1.414 billion and a subdued forecast for fiscal year 2026. According to InvestingPro data, the stock is now trading significantly below its Fair Value, suggesting potential upside opportunity. Truist Securities has maintained a Hold rating and a $110.00 price target on the company’s stock.
The downward movement in Booz Allen’s shares was attributed to pressures faced by Civil agencies, which overshadowed the anticipated growth in the Defense and National Security segments. Despite expectations for the Defense portfolio to grow in FY26, this is likely to be tempered by a double-digit decrease in Federal Civil business. The company maintains strong fundamentals with a healthy 12.36% revenue growth and operates with moderate debt levels, as revealed in the comprehensive InvestingPro Research Report, available along with 13 additional ProTips for subscribers.
In a statement, Truist Securities highlighted the challenges faced by Booz Allen Hamilton, "Civil Pressures Trump Defense Growth In Downside Outlook." The firm noted that while the Defense and National Security portfolio is expected to grow, the pressures in Civil agencies are significant enough to impact the overall outlook for the company.
Truist Securities has decided to maintain the Hold rating and $110 price target for Booz Allen Hamilton, citing a preference for companies with a higher mix of Defense-related business. In comparison, Truist has given Buy ratings to other companies in the sector, such as CACI and KBR (NYSE:KBR), which are perceived to be more favorably positioned in the current market environment.
The report from Truist Securities reflects a cautious stance on Booz Allen Hamilton, considering the mixed performance across its various segments. The firm’s analysis suggests that while there are growth opportunities within the company, there are also significant headwinds that could limit its performance in the near term. Trading at a P/E ratio of 14.87 and maintaining an overall GOOD financial health score according to InvestingPro metrics, the company continues to demonstrate resilient fundamentals despite near-term challenges.
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 (EPS) met expectations at $1.61, while revenue fell short, recording $2.97 billion against a forecast of $3.03 billion. This shortfall contributed to a significant stock decline in premarket trading. Despite the revenue miss, Booz Allen’s AI business saw substantial growth, exceeding 30% and contributing to the overall revenue increase. The company also announced plans for a 7% reduction in headcount in the first quarter of fiscal year 2026, reflecting ongoing restructuring efforts.
In a related development, Raymond (NSE:RYMD) James downgraded Booz Allen Hamilton’s stock from Outperform to Market Perform. This decision was influenced by the company’s slower organic growth and challenges aligning with U.S. government priorities. Analysts from Raymond James expressed concerns over the company’s profit margins and backlog, which showed signs of negative churn. Booz Allen’s fiscal year 2026 revenue is projected to be between $12 billion and $12.5 billion, with slower growth expected in the first half of the year. The company remains optimistic about future growth, particularly in defense and intelligence sectors, driven by strategic focus areas like AI integration and outcome-based contracting.
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