Wells Fargo Upgrades Booz Allen Hamilton (BAH) to Outperform; Model Should Allow Navigation Of Gov't Funding Headwinds

Wells Fargo upgraded Booz Allen Hamilton (NYSE: BAH) from Market Perform to Outperform with a price target range of $17-$19.

Wells analyst says, "We base this on the following: 1) After spending time with management, we came away increasingly comfortable that BAH's "agile"
(flexible, fluid) go-to-market, staffing, infrastructure and compensation models have been even further fine-tuned allowing BAH to be focused on its government clients' key (therefore well-funded) priorities (e.g. cyber security, health, cost efficiency, cloud, …) while sustaining modest (~10bps) annual adjusted EBITDA margin expansion despite an expected period of tightened federal spending and uneven client decision-making; 2) Upcoming analyst meeting should provide an opportunity for the management team to build investor comfort in BAH's differentiated, but still misunderstood by investors (in our view), model and market positioning; 3) Strong CQ3 awards should help meet short-term financial expectations despite the current market uncertainty in the wake of the "super-committee's" inability to agree on a deficit reduction strategy; 4) Diversified revenue base of over 5,000 task orders, the largest just ~1% of revenue; 5) Meaningfully improved balance sheet after significant debt reduction over the last year."

For an analyst ratings summary and ratings history on Booz Allen Hamilton click here. For more ratings news on Booz Allen Hamilton click here.

Shares of Booz Allen Hamilton closed at $14.74 yesterday.

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