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Booz Allen Hamilton (BAH, Financials) shares fell over 12% in premarket trading on Friday, May 23, after the consulting firm posted disappointing forward guidance and announced significant layoffs tied to federal cost-reduction initiatives.
The McLean, Virginia-based firm expects adjusted EPS for fiscal 2026 between $6.20 and $6.55, missing the $6.92 average forecast from analysts. Full-year revenue is projected between $12.0 billion and $12.5 billion, also below the $12.82 billion consensus.
In response to contract pressure from the Trump administration's budget-tightening policies, CEO Horacio Rozanski said the company will restructure and reset its civil business to align with reduced demand. CFO Matt Calderone said Booz Allen expects to cut approximately 7% of its 35,800-person workforceroughly 2,500 jobsmostly in the civil division.
Despite the restructuring, the firm said its defense and intelligence segments are expected to continue growing. In the fiscal fourth quarter, Booz Allen reported adjusted EPS of $1.61 on revenue of $2.97 billion, compared with expectations of $1.61 and $3.03 billion, respectively. Year-over-year revenue rose 7%.
Shares had been flat for the year prior to Friday's premarket drop, suggesting investor sentiment sharply reversed after the outlook and restructuring announcement.
Investors will be watching how effectively Booz Allen executes its cost alignment strategy while maintaining growth in the defense sector.
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This article first appeared on GuruFocus.