Booz Allen slides 6.8% on Treasury contract cancellations
Government cancels 31 contracts worth $21 million over data security concerns at consulting firm
Booz Allen Hamilton shares plunged 6.8% on Monday after the U.S. Treasury Department canceled 31 contracts with the government consulting firm, citing failures to protect sensitive government data in the wake of a high-profile IRS breach.
The McLean, Virginia-based company lost $6.99 to trade at $95.25 in afternoon trading, wiping nearly $900 million from its market capitalization. The Treasury terminated contracts valued at $21 million, according to [Bloomberg], though the figure represents just 0.2% of the company's $11.4 billion in trailing twelve-month revenue.
The government's decision follows the 2023 conviction of Charles Littlejohn, a former Booz Allen contractor who pleaded guilty to stealing and leaking confidential tax returns of thousands of wealthy Americans between 2018 and 2020. Littlejohn is currently serving a five-year prison sentence, and multiple billionaires have filed lawsuits alleging the firm failed to implement adequate data safeguards.
"When you have a breach of that magnitude involving taxpayer data, the ripple effects are inevitable," said one Washington government contracts consultant who declined to be named. "Other agencies are going to take a hard look at their own relationships."
The cancellation marks a sharp reversal for Booz Allen, which as recently as January 23 had seen its shares surge 6.8% after the company raised its fiscal year 2026 profit forecast and reported strong third-quarter results. Prior to Monday's decline, the stock was up more than 20% over the past six months.
Investor concerns extend beyond the immediate financial impact of the canceled contracts. The company derives more than 90% of its revenue from U.S. government agencies, with the Treasury and IRS representing significant clients. In June 2023, Booz Allen was awarded a position on a $2.6 billion IRS contract to modernize the tax agency's technology systems over seven years—a relationship now potentially at risk.
Monday's decline echoes the company's experience in May 2025, when similar contract cancellations triggered a 16% slide in Booz Allen's stock price. The company's shares have experienced heightened volatility since the IRS data breach came to light, swinging between trust in its cybersecurity expertise and fear of lost government business.
Analysts maintain mixed views on the stock's outlook. Stifel last week raised its price target to $115 from $106 while maintaining a Hold rating, while Citigroup lifted its target to $109 from $93 with a Neutral rating. The consensus target among analysts sits at $102.91, according to market data.
The company has continued to win government business even as it faces scrutiny. On January 12, Booz Allen received a $2.6 million contract from the Department of Homeland Security's Customs and Border Protection for enterprise cloud services, and on January 1 it secured a $7.9 million cybersecurity contract with the National Institutes of Health.
Booz Allen, which employs approximately 29,000 people and trades at 15 times trailing earnings, has positioned itself as a leader in cybersecurity and digital transformation for government clients. The firm reported $2.55 billion in gross profit over the trailing twelve months, with a profit margin of 7.4% and a dividend yield of 2.3%.
The Treasury's decision comes amid broader concerns in Washington about the security of sensitive government data held by contractors. Following a series of high-profile breaches across multiple agencies, federal officials have grown increasingly aggressive in enforcing security standards and terminating relationships with contractors deemed non-compliant.
For investors, the key question is whether Monday's contract cancellations represent an isolated incident or the beginning of a broader government reassessment of Booz Allen's fitness to handle classified and sensitive information. With the fiscal year 2026 federal budget process underway and multiple agency heads under pressure to demonstrate data security vigilance, the firm faces a critical test of its reputation in the coming months.