In today's digital age, cyber threats are on the rise and cybersecurity is a must for businesses around the world. According to Gartner (IT), global cybersecurity spending this year is expected to increase by 14.3% to $215 billion. Over the long term, the cybersecurity market is expected to expand at a compound annual growth rate of 9.7%, reaching $504.5 billion by the end of 2020. This highlights how seriously companies take protecting themselves and their data from hackers and malicious actors.
Additionally, the White House is pushing for a 10% increase in cybersecurity spending next year, which could benefit contractors like Booz Allen Hamilton Holdings (BAH). According to Wells Fargo (WFC), Booz Allen is poised to benefit from his 2% increase in operating and maintenance funding proposals.
Booz Allen ranks among the leading suppliers to the intelligence community, an industry that typically attracts investment regardless of economic fluctuations. Additionally, we have consistently returned value to our shareholders.
About Booz Allen Stock
Booz Allen Hamilton (BAH), based in McLean, Virginia, is a management and technology consulting firm that provides digital solutions, including artificial intelligence (AI) and cyber services, to clients around the world.
Booz Allen shares, valued at $19.2 billion, have risen 15.4% year-to-date, outpacing the broader S&P 500 index (SPX)'s 6.3% gain over the same period.
Booz Allen has demonstrated its commitment to shareholders by consistently increasing dividends for more than a decade. The company pays an annual dividend of $1.92 per share and has a dividend yield of 1.30%. In the third quarter, we distributed $61.7 million through quarterly dividends.
Booz Allen stock's forward P/E ratio of 24.73x and sales of 1.88x are higher than the median in the Research and Consulting Services industry. However, the company's price-to-earnings ratio (PEG) of 1.96x is lower than the company's average over the past five years.
Booz Allen's third-quarter profit beats Wall Street expectations
On January 26, Booz Allen reported third-quarter adjusted net income of $184.3 million, or $1.41 per share, beating Wall Street expectations by 24.8%. The company's sales rose 12.9% year over year to $2.6 billion, slightly exceeding TheStreet's expectations.
In April, Booz Allen partnered with Cloudflare, Inc., a leading connected cloud company, to provide immediate response to cybersecurity threats for organizations facing distributed denial of service (DDoS) and ransomware attacks. We have partnered with (NET). “Cloudflare and Booz Allen together provide organizations under attack with protection and expertise when they need it most,” said Brendan Rooney, Booz Allen's senior vice president of global commercial incident response. “We will be able to utilize this to lead to mitigation.”
Management has raised its guidance for fiscal 2024, predicting revenue growth of 14% to 15% and adjusted EBITDA in the range of $1.16 billion to $1.18 billion. Adjusted EPS is expected to be between $5.25 and $5.40, and net cash provided by operating activities is expected to be in the range of $200 million to $275 million.
Analysts who follow Booz Allen expect the company's 2024 earnings to rise 18.2% from a year ago to $5.39. FY2025 earnings are expected to increase further by 8.9% to $5.87 per share.
What do analysts expect from Booz Allen stock?
The consensus rating for Booz Allen stock is a “fair buy.” Of the 11 analysts covering BAH, 6 have recommended a 'strong buy' rating, 4 have recommended a 'hold' rating and 1 has recommended a 'strong sell' rating.
Analysts' average price target is $151.60, suggesting a relatively modest upside of 2.9% from current levels. However, the high $170 price target that Jefferies maintained earlier this month suggests the stock could rise as much as 15.4% from current levels.
On the date of publication, Sristi Suman Jayaswal did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
