“Beyond What we Originally Expected”: Booz Allen Stock (NYSE:BAH) Plummets as Near-Decimation of Workforce Planned

While the early word about consulting stock Booz Allen (BAH) seemed like it would be pretty positive—the earnings report featured some worthwhile numbers, though the outlook was a little less than inspiring—what followed the earnings report made it abundantly clear disaster was on the wind. Booz Allen planned a near-decimation of its workforce, and shares plunged nearly 15% in Friday afternoon’s trading.

For those not familiar, a “decimation” in the truest sense means 10% lost, one in every 10. It was typically used by Roman legions as a punishment for mutiny or desertion, though in that case, the losses were executions rather than pink slips. Booz Allen did not quite go that far, but with plans to fire 7% of the workforce, it is still pretty close. Around 2,500 people will be losing jobs as a result of slowing government spending.

Most of the cuts will be coming, accordingly, to the division that handles civilian government operations. Booz Allen will be paring back on its layers of management as well, a familiar refrain these days. The cuts are likely particularly galling to Booz Allen, as it recently proposed over a billion dollars’ worth of cost savings connected to its own projects, but is still left cutting staff anyway.

One Bureaucratic Hire

However, this does not mean Booz Allen is getting rid of all its bureaucracy. In fact, it recently announced that Todd Cignetti was joining Booz Allen as vice president of technical product management. Cignetti, previously, was a general manager at Amazon Web Services, getting the company up to three-nines (99.9%) availability.

Cignetti has also been involved with product road map development and cloud transition operations, which should make him a good pick as a technical product management operative. With a background in cybersecurity, computer engineering, and more, that should also prove helpful, especially as more and more companies look to transition into cloud-based operations, as well as potentially bring artificial intelligence on board.

Is Booz Allen Stock a Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on BAH stock based on four Buys, four Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 18.54% loss in its share price over the past year, the average BAH price target of $136.89 per share implies 24.68% upside potential.

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