The Department of Government Efficiency is a major headwind to defense stocks.
Mariana Perez Mora, a Bank of America analyst says that a few of these companies will benefit directly from the DOGE’s efforts to reduce costs and improve federal government efficiency.
What can investors expect from Booz, Allen Hamilton and Palantir Technologies Inc. in 2025?
Booz Allen Hamilton Holding Corporation (NYSE: BAH)
Perez Mora has high hopes for Booz, Allen Hamilton. She believes that the IT modernization in defense is at the beginning of “a long-term upward cycle.”
Bank of America’s analyst expects that the industry will grow at a rate of high single-digits over the next few years.
BAH is a favorite of hers in the Defense IT sector, as the company has “adapted quickly to US Government’s growing willingness to use commercially available solutions.”
BofA rates Booz Allen Hamilton as “buy”. The $210 target price indicates that the McLean-based firm’s shares could rise by about 75% from their current level.
Perez Mora is attracted to the New York listed firm because of its recent decline from $186 late in October, down to just $121 as I write.
BAH is still sinking even after it announced better than expected results for its third quarter financial last week. Horacio Rozanski told investors in the release of earnings:
Booz Allen, the company that drives speed and results with advanced technologies. In today’s challenging environment, we’re excited and well-positioned to accelerate the mission of our clients.
Booz Allen Hamilton also pays out a dividend of 1.82%, making it even more appealing to buy.
Palantir Technologies Inc (NASDAQ: PLTR)
The Bank of America analyst believes that the stock still has room for growth.
Perez Mora believes that PLTR will benefit from efforts of the Department of Government Efficiency, which is committed to operationalizing data and establishing “high-fidelity digital twins” for enterprises, as well as accelerating decisions.
Palantir’s shares are given a “buy” recommendation, and paired with a price target of $125. This indicates ten percent more upside potential from the current level.
BofA’s analyst suggests that you own PLTR for the following reasons:
Data analytics and AI are essential for timely decision-making. This includes everything from reducing duplication of contracts to improving logistics to developing autonomous systems to command and control and communication on the battlefield.
The Denver-based firm announced its fourth quarter financial results last week that easily exceeded Street expectations.
Palantir, unlike BAH, does not pay dividends at this time.
The post Musk’s DOGE: 2 Stocks that could Benefit from its efforts will be updated as new information becomes available
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