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

Core Viewpoint - Goldman Sachs analyst Noah Poponak downgraded Booz Allen Hamilton from Neutral to Sell, lowering the price forecast from $108 to $94, citing limited revenue and earnings growth in the medium term and ongoing valuation risks [1]. Group 1: Revenue and Earnings Outlook - 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 [2]. - Organic revenue growth for Booz Allen Hamilton is anticipated to be flat for the next few years, which may take time for the stock to absorb after its previous strong growth [4]. Group 2: Contracting and Margins - The analyst highlights a shift toward more outcomes-based and fixed-price contracting in the sector, raising concerns about increased risk for contractors and potential pressure on margins [4]. - Federal civilian agency budgets are under pressure, with other government spending areas taking priority, which may impact Booz Allen Hamilton's performance [3]. Group 3: Market Reaction - Booz Allen Hamilton shares closed down by 4.70% to $104.66 following the downgrade [5].