What Happened?
Shares of government consulting firm Booz Allen Hamilton (NYSE:BAH) jumped 3.7% in the morning session after the company was set to be included in the S&P MidCap 400 index.
This move was significant because investment funds that track the S&P MidCap 400 had to buy shares of the company to align their portfolios with the updated index. This automatic buying pressure from passive funds often resulted in a price increase for newly included stocks. The announcement was part of a scheduled rebalancing of the S&P indices, which also saw other companies like Pinterest join the MidCap 400.
After the initial pop the shares cooled down to $91.75, up 4.3% from previous close.
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What Is The Market Telling Us
Booz Allen Hamilton’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 15% on the news that the company reported weak first quarter 2025 result: Revenue and EBITDA both missed. The shortfall came from slow contract signings, with the book-to-bill ratio slumping to 0.71x, showing the firm added less work than it delivered. Looking ahead, the company's full-year revenue guidance missed and its full-year EPS guidance fell short of Wall Street's estimates. Overall, this quarter could have been better.
Booz Allen Hamilton is down 28.4% since the beginning of the year, and at $91.75 per share, it is trading 35.9% below its 52-week high of $143.06 from January 2025. Investors who bought $1,000 worth of Booz Allen Hamilton’s shares 5 years ago would now be looking at an investment worth $1,042.
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