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Investing.com - Stifel initiated coverage on Booz Allen Hamilton (NYSE:BAH) Monday with a Hold rating and a $112.00 price target, citing concerns about government reforms impacting the consulting firm.
Government services stocks have experienced excessive selling due to DOGE and broader concerns about changing industry fundamentals, according to Stifel. The research firm noted that Booz Allen Hamilton and other consultants are "in the cross-hairs" of ongoing government reforms.
Stifel expects these reform pressures to continue weighing on Booz Allen’s valuation multiple and investor sentiment. The firm projects muted organic revenue growth and flat margins for Booz Allen in fiscal year 2025.
Despite current challenges, Stifel acknowledged Booz Allen’s historical position as "one of the most consistent government services companies" in the sector. The research firm expressed confidence that Booz Allen will "eventually emerge stronger" following its announced restructuring.
Stifel indicated a preference for smaller service companies in the government sector, suggesting their ability to pivot and adapt to changing U.S. government priorities is underappreciated by investors.
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