Booz Allen Hamilton Downgraded: Analyst Flags Flat Revenue Growth, Margin Pressure

Goldman Sachs analyst Noah Poponak downgraded Booz Allen Hamilton Holding Corporation BAH from Neutral to Sell, lowering the price forecast from $108 to $94.

Poponak notes that revenue and earnings growth may remain limited over the medium term, with valuation still facing downside risk.

Medium-term revenue growth is now expected to be closer to flat, due to pressure on federal civilian spending and shifting priorities within the U.S. Department of Defense. Margins may also be at risk as contract structures evolve.

Also Read: Booz Allen Says It Is Accelerating ‘The Administration’s Priorities’, But Its Annual Outlook Spooks Investors

Poponak points out that federal civilian agency budgets are under pressure, with other government spending areas taking priority.

Booz Allen Hamilton appears more frequently than peers on the DOGE contract cancellation site.

Several initiatives to cut federal civilian spending seem to be ongoing.

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As a result, Booz Allen Hamilton’s organic revenue growth is now expected to be closer to flat for the next few years, which may take time for the stock to absorb after its strong growth over recent years.

The analyst highlights that companies in the sector are noting a shift toward more outcomes-based and fixed-price contracting.

This raises concerns as it places more risk on contractors and may pressure margins.

While firms may initially present this as an opportunity, since strong execution and contract terms can make it one, it remains difficult to get those elements “exactly right.”

BAH Price Action: Booz Allen Hamilton shares closed down by 4.70% to $104.66 on Wednesday.

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