Booz Allen Hamilton’s shares dropped over 12% in premarket trading following a weak financial forecast and plans to reduce workforce by 7% in the civilian sector.
Booz Allen Hamilton, a leading government consulting and contracting firm, faced a sharp decline in its stock price after issuing a disappointing financial forecast for 2026 and announcing plans to cut 7% of its workforce amid reduced civilian budgets.
Booz Allen’s Weak Financial Outlook for 2026
Booz Allen Hamilton Holding Corp, a prominent player in government consulting and contracting, released its forecast for fiscal year 2026. The company expects adjusted earnings per share (EPS) to range between $6.20 and $6.55, falling short of analysts’ estimates of $6.92. Additionally, projected revenues are between $12 billion and $12.5 billion, down from analysts’ expectations of $12.82 billion.
Impact of Government Spending Cuts on Civilian Sector
CEO Horacio Rozanski stated during the earnings call that the Trump administration’s focus on cost reduction has significantly affected the company’s contracts with civilian agencies. Consequently, Booz Allen is undertaking a “restructuring and reset” of its civilian business to align costs and staffing levels with anticipated lower demand.
Workforce Reduction Plan and Growing Segments
CFO Matt Calderone announced the company plans to cut approximately 7% of its workforce in the first quarter of 2026. These layoffs will be heavily concentrated in the civilian sector, while the defense and intelligence segments are expected to continue growing. With around 35,800 employees as of the end of March, the workforce reduction translates to roughly 2,500 positions.
Q4 Financial Results
In its fourth-quarter report, Booz Allen posted an adjusted EPS of $1.61, meeting analysts’ expectations, but revenues of $2.97 billion fell short of the $3.03 billion forecast.
Market Reaction to the News
Following the announcement, Booz Allen’s shares plunged more than 12% in premarket trading. This sharp decline comes after relatively stable stock performance since the start of the year, highlighting investor concerns about the company’s financial outlook.
Conclusion
The cuts in civilian budgets and the layoff plan raise red flags for shareholders and market analysts. However, sustained growth in the defense and intelligence sectors may help alleviate some financial pressures and provide relative stability moving forward.
