Shares of government technology consultancy Booz Allen Hamilton (NYSE: BAH) fell on Wednesday, down as much as 4.9% before recovering modestly to a 4% decline as of 1:37 p.m. ET.

Booz Allen sold off by a double-digit number last Friday following its fiscal-fourth-quarter earnings release, before recovering a bit yesterday. But today, sell-side analysts downgraded their ratings and price targets, and these delayed negative takes from last week's earnings appear to be sending shares down again today.

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Goldman Sachs downgrades to sell

Today, analysts at Goldman Sachs downgraded Booz Allen Hamilton shares from neutral to sell, while lowering the firm's price target on shares from $108 to $94. As of this writing, Booz Allen's stock price is $104.75.

The Goldman analysts downgraded shares because they now see medium-term earnings growth as "flat," given the new outlook from management on last Friday's conference call with analysts. On that call, management noted that it sees revenue growth between 0% and 4% in fiscal 2026 (ending in March 2026), down from 12.4% last year, with an adjusted (non-GAAP) earnings range of $6.20 to $6.55. That compares with $6.35 earnings last year.

If by "the medium term" Goldman means the one-year outlook, it's right on that front. And if that remains the growth rate for Booz Allen going forward, then yes, the current multiple of around 16.5 could be correct, or even a little high.

Image source: Getty Images.

But there's a high likelihood growth resumes after this year

Goldman seems a bit short-term-oriented and pessimistic here, assuming this year's DOGE cuts are a one-time reset. Booz Allen projected a low double-digit decline in its civil business this year, which makes up 35% of its revenue. But that means its defense and intelligence businesses, which make up 65% of revenue, are still likely to grow in the double digits, in order for the whole company to reach management's 2% overall growth projection. Of note, Booz Allen has grown at an 11.7% organic rate over the past three years.

But if the civil business stabilizes after this year, it seems like Booz Allen should continue to resume its prior growth rate in 2027. That means its P/E multiple could go back to the low-20s, which has been about its average over the past decade.

Thus, long-term-oriented investors may wish to look at Booz Allen shares on this recent weakness.

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Billy Duberstein and/or his clients have positions in Booz Allen Hamilton and has the following options: short December 2025 $55 puts on Booz Allen Hamilton. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool recommends Booz Allen Hamilton. The Motley Fool has a disclosure policy.

Shares of consulting company Booz Allen Hamilton (NYSE: BAH) fell on Friday, down as much as 5.1% before recovering a bit to a 1.7% decline as of 1 p.m. ET. The decline was notable in comparison with the S&P 500 index, which had rallied 1.3% at that time.

Booz Allen had some negative news today as a result of the Department of Defense announcing big spending cuts. The company gets virtually all of its revenue from government contracts, and the stock has sold off hard since Election Day on the expectation it would lose business.

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However, are today's cuts already priced into the stock?

Pete Hegseth announces $5.1 billion in Defense Department cuts

Last night, Secretary of Defense Pete Hegseth announced $5.1 billion in cuts from the Department of Defense budget. Booz Allen was listed as one of the consulting contracts that were eliminated.

While $5.1 billion certainly sounds like a lot, only $1.8 billion of that total had been allocated to consulting companies. And of that $1.8 billion, Booz Allen was mentioned along with Accenture (NYSE: ACN), Deloitte, and "others."

On the heels of the announcement, Noah Poponak at Goldman Sachs lowered his price target on Booz Allen from $150 to $109, roughly about where the stock is now. Poponak said: "We believed the company's expertise in AI and Cyber gave it exposure to high growing and insulated areas of the Federal spend, but the company has been more negatively impacted by DOGE contract reductions than we anticipated. We see risk to estimates as results are reported in the coming quarters."

Still, given that the stock had already sold off 43% from its pre-election all-time highs, the overly negative scenario could already be priced in.

Should you buy the dip?

While the cancellation of the contract is definitely a negative, it's a good idea to keep some perspective. Over the past 12 months, Booz Allen had $11.8 billion in revenue, growing at a double-digit rate. Moreover, the company had a $39.4 billion backlog as of its January earnings report.

In that light, a mere fraction of $1.8 billion in cuts doesn't seem so bad; in fact, it seems pretty small compared with the overall business.

With the stock now trading around 16 times earnings, compared with an average in the low 20s over the past 10 years, Booz Allen Hamilton could be an interesting value opportunity, provided there aren't many more drastic cuts to its government contracts.

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Billy Duberstein and/or his clients have positions in Booz Allen Hamilton and has the following options: short December 2025 $55 puts on Booz Allen Hamilton. The Motley Fool has positions in and recommends Accenture Plc and Goldman Sachs Group. The Motley Fool recommends Booz Allen Hamilton. The Motley Fool has a disclosure policy.