JP Morgan analyst Seth M. Seifman has made some changes to his outlook on federal IT services companies, specifically Science Applications International Corporation (SAIC) and Booz Allen Hamilton Holding Corporation (BAH). Seifman has upgraded SAIC to “Overweight” from “Neutral”, raising the price target to $170 from $150. He’s optimistic about SAIC’s future based on the company’s focus on higher-value work and its strong performance in recent quarters. He points to a growing pipeline and planned increase in submitted bids as indicators of future success. Despite potential risks and challenges in securing and executing new contracts, Seifman believes SAIC is well-positioned to overcome these hurdles and deliver growth.
On the other hand, Seifman has downgraded Booz Allen Hamilton to “Underweight” from “Neutral”, although he did raise the price target to $158 from $154. While BAH has enjoyed impressive growth in recent quarters, Seifman anticipates this growth to slow down, bringing it more in line with industry peers. He highlights the company’s recent revenue shortfall and higher-than-expected costs as cause for concern. Despite these challenges, BAH’s stock has reached an all-time high. However, Seifman emphasizes that the company faces a high bar for future performance and may struggle if growth slows.
These changes in rating reflect JP Morgan’s assessment of the current market conditions and the potential for future growth within the federal IT services sector. Investors will be watching closely to see how SAIC and BAH perform in the coming quarters as they navigate the evolving landscape of government technology contracts.