Booz Allen cut to Sell equivalent at BofA as National Security can't offset Civil weakness

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Booz Allen Hamilton (NYSE:BAH [https://seekingalpha.com/symbol/BAH]) -10.2% in Friday's trading to a more than two-year low $88.11 after narrowly missing Q2 adjusted earnings [https://seekingalpha.com/news/4508137-booz-allen-non-gaap-eps-of-1_49-misses-by-0_02-revenue-of-2_9b-misses-by-70m] estimates and cutting full-year earnings guidance below Wall Street consensus, as slower civilian spending and timing shifts hit the company's results and outlook.

The company lowered guidance for FY 2026 adjusted EPS to $5.45-$5.65 from $6.20-$6.55 and below $6.30 analyst consensus estimate, revenues of $11.3 billion-$11.5 billion from $12 billion-$12.5 billion and compared to $12.06 billion consensus, and full-year adjusted EBITDA to $1.19 billion-$1.22 billion from $1.32 billion-$1.37 billion.

Bank of America double downgraded Booz Allen (NYSE:BAH [https://seekingalpha.com/symbol/BAH])‌ to Underperform from Buy with a $90 price target, slashed from $160, citing the magnitude of the decline in the company's Civil segment, with potential for more downside to come, while the strong position across the National Security portfolio is not enough to offset growing pressure from Civil or propel growth in the near term.

BofA previously had seen Booz Allen's 7% headcount reduction and plan to "reset and restructure" the Civil business as a "clearing the decks" event, but the continued turmoil in civilian agency priorities, lack of a September budget flush and continued uncertainty around the budget funding including the government shutdown pose further risks to the downside.

On top of declines seen throughout H1, BofA analysts now expect an additional 30% decline in Civil revenues for H2 2026 vs. H1 2026 compared to their prior outlook for a 5% drop.

J.P. Morgan analyst Seth Seifman, who rates the stock at Underweight, said the market understood the potential for a guidance cut, but the cut presented by Booz Allen (BAH [https://seekingalpha.com/symbol/BAH]) is "steep," as the presidential transition has "generated more challenges for BAH than for most other services contractors, particularly on the civil side."

William Blair analyst Louie DiPalma, who rates the stock at Outperform, said he expects the guidance cut will "serve as a clearing event, given the strong bookings," and believes Booz Allen (BAH [https://seekingalpha.com/symbol/BAH]) will experience a rebound in FY 2027.

MORE ON BOOZ ALLEN HAMILTON

* Booz Allen Hamilton Q2 2026 Earnings Call Transcript [https://seekingalpha.com/article/4833100-booz-allen-hamilton-holding-corporation-bah-q2-2026-earnings-call-transcript]
* Booz Allen Hamilton: Skeptical Even After Encouraging Update [https://seekingalpha.com/article/4811161-booz-allen-hamilton-skeptical-even-after-encouraging-update]
* Seeking Alpha’s Quant Rating on Booz Allen [https://seekingalpha.com/symbol/BAH/ratings/quant-ratings]