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On Tuesday, UBS analyst Gavin Parsons (NYSE:PSN) maintained a Neutral rating on Booz Allen Hamilton stock (NYSE:BAH), with a steady price target of $135.00. Parsons highlighted that the company’s fiscal year 2026 revenue guidance of 0-4% fell short of UBS’s projection of 2-5%. Despite this, the anticipated EBITDA margin of approximately 11%, which is consistent year-over-year and aligns with expectations, leads to an EBITDA figure that is 5% below the consensus. The stock has experienced significant pressure, falling nearly 17% in the past week and currently trading near its 52-week low. According to InvestingPro analysis, the stock appears undervalued at current levels.
The analyst pointed out that the consensus revenue growth estimate stands at 6%, but market expectations might be lower. The recent quarter’s results, showing a 2% revenue shortfall and a 5% EBITDA miss, challenge the idea of a definitive positive turn for the company. Parsons noted that consulting headcount remained unchanged sequentially, which is often seen as a precursor to growth. InvestingPro data shows the company maintains strong fundamentals with a current ratio of 1.79 and operates with moderate debt levels. Subscribers can access 12 additional ProTips and comprehensive financial metrics for deeper analysis.
Parsons also mentioned that Booz Allen Hamilton’s net book-to-bill ratio was 0.7X when considering the restated backlog, which now omits contracts with expired performance periods, and 1.4X on a last twelve months (LTM) basis. The company executed a $310 million accelerated share repurchase (ASR) in the fourth quarter, resulting in a leverage ratio of 2.4X net.
During the earnings call, Parsons expressed an interest in gaining insights on several key issues including contract debookings or cancellations, the review of the General Services Administration (GSA) contract, budget expectations, and the dynamics of headcount. The analyst’s comments suggest a focus on understanding the risk factors and headwinds that could impact Booz Allen Hamilton’s performance moving forward.
In other recent news, Booz Allen Hamilton reported its fourth-quarter earnings for fiscal year 2025, revealing a mixed financial performance. The company’s earnings per share (EPS) met expectations at $1.61, but revenue fell short, coming in at $2.97 billion compared to the projected $3.03 billion. Despite this revenue miss, Booz Allen’s AI business demonstrated significant growth, exceeding 30% and reaching approximately $800 million. The firm also announced plans for a 7% headcount reduction in the first quarter of fiscal year 2026. Raymond (NSE:RYMD) James downgraded Booz Allen from Outperform to Market Perform, citing a slowdown in organic growth and challenges aligning with U.S. administration priorities. Truist Securities maintained a Hold rating with a $110 price target, noting civil agency pressures affecting the company’s outlook. Booz Allen’s backlog increased by 15% to $37 billion, indicating potential future revenue growth. The company projects fiscal year 2026 revenue between $12 billion and $12.5 billion, with an adjusted EBITDA range of $1.315 billion to $1.370 billion.
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