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 ReadBooz 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.

RelatedUpping 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 ReadBooz 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.

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