Booz Allen Hamilton (BAH) – A Smart Play on Government Efficiency
Booz Allen Hamilton may not be the first name that comes to mind when thinking about defense stocks, but that’s exactly why it presents an opportunity. The stock has taken a hit over the past year, down more than 25%, as investors worry about potential federal spending cuts under the new administration. But those concerns could be overstated, and Booz Allen might actually benefit from Washington’s renewed focus on efficiency.
The company specializes in high-tech consulting for government agencies, particularly in defense, cybersecurity, and artificial intelligence. With Elon Musk’s Department of Government Efficiency (DOGE) panel pushing for cost-cutting across federal agencies, Booz Allen is uniquely positioned to win contracts that streamline operations and implement advanced technology. The company’s expertise in artificial intelligence and digital modernization could make it a go-to resource as the government looks to reduce waste while maintaining effectiveness.
Bank of America sees the potential here, reiterating its buy rating and setting a $210 price target, which suggests a 62% upside from recent levels. Booz Allen’s strong client relationships and deep technical expertise give it an edge as agencies look to upgrade their systems without dramatically increasing spending.
While broader defense stocks have dipped since late January, Booz Allen is off to a strong start in 2025, up 3.5% year-to-date, outpacing the S&P 500’s 2.5% gain. Given its long history of working closely with the government and its role in modernizing key defense and intelligence systems, Booz Allen stands to benefit from Washington’s efficiency drive. With the stock still well below its highs, this could be a prime entry point for long-term investors.
