From Strong Dividends To Big Government Contracts: Why B Of A Analyst Is Bullish On Booz Allen Hamilton

B Of A Securities analyst Ronald J. Epstein upgraded Booz Allen Hamilton Holding Corp BAH to Buy from Neutral at an increased price target of $130 from $110.

The analyst believes BAH's unique exposure to accelerating technologies and modernization initiatives will drive strong organic growth in the near term. 

Also Read: Booz Allen Hamilton Bags Thunderdome Production Agreement

Also, Epstein notes that softer-than-expected acquisition activity will aid in redirecting capital deployment for paying strong dividends and facilitating buybacks.

The analyst sees BAH's exposure to rapidly growing government-wide acquisition of multi-billion-dollar contracts and AI as significant tailwinds.

Related: Upping The AI Security Ante: Booz Allen Invests In HiddenLayer To Guard Machine Learning Models

The analyst notes that BAH is increasing investment in hiring people as employees are key assets for the traditionally asset-light defense services companies and sees it slowing down.

The analyst lowered FY24e EPS to $5.00 from $5.10 as stronger-than-expected EBITDA is offset by higher interest expense on the financing related to the DoJ settlement. The analyst maintained FY25e EPS unchanged at $5.65 and increased FY26e to $6.30 from $6.25.

Also Read: Booz Allen Hamilton Raises $650M Via Debt Offering

Price Action: BAH shares are trading higher by 0.99% at $114.70 on the last check Tuesday.