Key Takeaways
- Booz Allen shares jumped 7% after TD Cowen upgraded the stock to Buy from Hold and raised its price target to $95 from $77.
- The upgrade is well founded, because funded backlog rose 5% to $5.7 billion in the quarter ended Sept. 30 even as revenue fell 4%.
- Booz Allen also raised its fiscal 2027 adjusted EPS guidance to $6.50 to $6.70 a share, up from $6.00 to $6.35.
- The stock still trades well below its five-year average forward P/E, and the shrinking civil business is the main thing to watch.
Booz Allen Hamilton (BAH) shares are up 7% today after TD Cowen upgraded the stock to Buy from Hold before Monday’s open.
Friday’s results showed falling revenue. Over the weekend, analysts looked past it.
What exactly happened
TD Cowen analyst Gautam Khanna raised his price target to $95 from $77, citing Booz Allen’s improving funded backlog. Citi also raised its target, to $88 from $77, and UBS raised its to $86 from $79. Both kept Neutral ratings.
Those calls came after Booz Allen’s fiscal second-quarter results on Friday, for the quarter ended Sept. 30:
- Revenue fell 3.9% to $2.8 billion, and civil revenue dropped 15%.
- Adjusted EPS rose 18% to $1.76.
- Funded backlog rose 5% to $5.7 billion, and national security funded backlog was up 10%.
- Full-year adjusted EPS guidance went up to $6.50 to $6.70, from $6.00 to $6.35.
The backlog is the story
According to TD Cowen, funded backlog has grown for four quarters in a row. It now covers about 6.2 months of sales, which is better than recent history.
That matters because the top line has been going the wrong way…
Revenue fell from $12.0 billion in fiscal 2025 to $11.2 billion in the year ended March 2026. Analysts expect it to reach $12.4 billion by fiscal 2029. A growing pile of funded work is how Booz Allen gets there. As CFO Troy Lahr said on the company’s second-quarter call, “We have significant backlog of funded work to execute on and have aggressively scaled up our hiring.”
Earnings have kept climbing the whole time…
The $6.62 consensus for this year sits near the top of the new guidance range.
TIKR tracks 15 analysts on Booz Allen Hamilton. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Booz Allen Hamilton, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Booz Allen Hamilton’s Analyst Ratings
Cheap for a reason, but cheap
BofA didn’t buy it. It cut its target to $68 and kept an Underperform rating. Civil revenue is still shrinking fast, and the backlog has to make up for that.
Even so, the stock is cheap against its own history…
Booz Allen traded at 12x forward earnings at Friday’s close, and it’s closer to 13x after today’s move. Its five-year average is 20x, and it peaked at 28x in October 2024.
I think TD Cowen has this one right. I’d trust funded backlog over one quarter’s revenue as a guide to where sales go next, and at 13x forward earnings, I don’t see the market paying much for a return to growth. What I’ll be watching in the next report is whether civil revenue finally levels out.
So what is Booz Allen stock actually worth?
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Disclaimer:
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