Booz Allen Hamilton Holding Corp (BAH)

[MWM]

BAH Booz Allen Estimate Lowered by Susquehanna on Contract Risks
By Todd Shields & Nick Taborek - Jun 12, 2013 10:34 AM ET

Intelligence agencies may “freeze” certain Booz Allen Hamilton Holding Corp. projects while they review its handling of classified information after an employee revealed a secret U.S. electronic surveillance program, according to Susquehanna Financial Group.

“There is real contract risk” for Booz Allen, majority owned by the Washington-based private-equity firm Carlyle Group LP (CG), Susquehanna analyst James Friedman said in a note today. He dropped estimated earnings per share to $1.40 from $1.47 for the current fiscal year.

Booz Allen, based in McLean, Virginia, dropped 2.4 percent to $16.73 at 10:23 a.m. in New York trading after earlier declining as much as 3.7 percent.
The shares have fallen 6.8 percent since a former employee, Edward Snowden, over the weekend said he had provided journalists with secret documents describing U.S. surveillance programs.

Booz Allen yesterday said it had fired Snowden, 29, whom it employed as a technical assistant in Hawaii.
The company received 23 percent, or $1.3 billion, of its $5.76 billion in fiscal 2013 revenue from intelligence agencies, according to a regulatory filing.

Friedman’s reduced estimate reflects the possibility that contracts making up about 4 percent of the firm’s intelligence revenue may be put on hold pending a review, according to the note. The company will probably need to increase spending on compliance-related controls, Friedman wrote.

He maintained his “negative” rating on the stock, a view he has held since September 2011.

The leak investigation “does not immediately affect the ‘BB’ corporate credit rating on the company,” Standard & Poor’s said today in a statement.

James Fisher, a Booz Allen spokesman, didn’t immediately return a phone call seeking comment.