On February 22, 2025, William Blair downgraded Parsons (PSN) to Market Perform from Outperform, without providing a specific price target. The downgrade was attributed to uncertainty surrounding the Department of Government Efficiency (DOGE) initiative. This initiative involves a review of consulting services across U.S. Department of Defense agencies.
Reports indicated that all U.S. Department of Defense agencies were instructed via a memo to undergo a contract-by-contract review of consulting services. The directive also included the potential termination of nonessential consulting programs. This action creates a challenging setup for defense technology services contractors, including Parsons.
Analysts noted that the process of signing and renewing government contracts has slowed due to DOGE reviews and a planned reorganization of the State Department. This external regulatory action casts doubt on the financial futures of government contractors, suggesting a more significant headwind than previously anticipated for Parsons' outlook.
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