Tuesday, Booz Allen Hamilton (NYSE:BAH) shares saw its price target increased by TD Cowen from $158.00 to $177.00, with a continued Buy rating on the stock. The firm's optimism is based on the company's strong performance prospects for the fiscal year 2025 (FY25).
Booz Allen Hamilton is expected to experience growth throughout the year, despite potential uncertainties in funding during the second half of the year.
The company is entering FY25 with strong demand and supply dynamics, which are anticipated to drive revenue growth at the higher end of its 8-11% guidance.
The growth in consulting services is outpacing the overall increase in headcount, indicating potential improvements in general and administrative expenses relative to sales. Additionally, billables as a percentage of sales reached a new peak of 30.8% in the fiscal year 2024 (FY24).
Booz Allen Hamilton's gross margin for FY24 set a record at 53.8%, and even if this margin remains flat or increases, the adjusted EBITDA margins are expected to be stable or improve from FY24's 11.0%.
These financial metrics suggest a promising outlook for the company's adjusted earnings per share (EPS), which could see a 15% increase to $6.30.
The firm also anticipates that Booz Allen Hamilton will have greater financial flexibility, forecasting a rebound in free cash flow (FCF) to a more typical level of $760 million. This financial projection underscores the company's potential for robust performance in the coming fiscal year.
InvestingPro Insights
As Booz Allen Hamilton (NYSE:BAH) garners a positive outlook from TD Cowen, InvestingPro metrics and tips provide additional insights into the company's financial position. With a market capitalization of $20.5 billion and a P/E ratio standing at 34.52, the company appears to be valued at a premium relative to its earnings. However, the forward-looking PEG ratio of 0.27 suggests that this valuation may be justified by the near-term earnings growth prospects. Moreover, the company's stock has experienced notable price appreciation, with a 67.27% one-year total return, reflecting investor confidence.
Two InvestingPro Tips highlight the company's track record and future potential: Booz Allen Hamilton has raised its dividend for 8 consecutive years and maintained payments for 13 consecutive years, signaling a commitment to shareholder returns. Additionally, 4 analysts have revised their earnings upwards for the upcoming period, indicating a positive earnings outlook. For investors seeking to delve deeper into Booz Allen Hamilton's financials, InvestingPro offers more tips at https://www.investing.com/pro/BAH. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and discover the full range of 15 additional InvestingPro Tips that could inform your investment decisions.
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