Booz Allen initiated with a Neutral at UBS

UBS analyst Gavin Parsons initiated coverage of Booz Allen (BAH) with a Neutral rating and $159 price target as the firm initiates coverage on on Government IT & Services stocks. Government austerity is not the firm’s base-case scenario in the current environment of elevated global geopolitical tension and rapid technological advancement, and the 20% de-rating in stocks since the election may ultimately prove overdone, but UBS sees more headline risk than re- rate potential over the next year and as a result, believes it is too early to broadly buy the selloff, the analyst tells investors in a research note. While Booz Allen has consistently outgrown peers with expanding margins, UBS does not see any upside to consensus estimates, and following the DOGE-related de-rating in the group, says a quality premium de-rating exists in the stock vs. peers.