Houlihan Lokey Posts Solid Q3, But Stock Slips as Analysts Hold Steady on Outlook

Shares of investment bank Houlihan Lokey, Inc. (NYSE:HLI) tumbled 12% in the week following its third-quarter earnings release, closing at US$169, even as the firm delivered results largely in line with Wall Street's expectations. The disconnect between a seemingly stable financial performance and a sharp market sell-off has investors scrutinizing the fine print and the longer-term trajectory for the advisory giant.

The company reported revenue of US$717 million for the quarter, matching consensus estimates. On the bottom line, statutory earnings per share (EPS) came in at US$1.70, a 3.5% beat over analyst forecasts. In response, the analyst community has issued updated models, yet the overarching sentiment appears to be one of continuity rather than dramatic change.

Looking ahead, the consensus among the nine analysts covering Houlihan Lokey points to revenues of US$3.07 billion by fiscal 2027, implying a solid 16% increase from the prior twelve months. EPS is projected to jump 21% to US$7.77. Notably, these figures represent only marginal adjustments from pre-earnings estimates of US$3.09 billion in revenue and US$7.73 EPS, indicating the latest results did little to alter the fundamental growth narrative.

"The market's knee-jerk reaction seems harsh given the earnings beat," said Michael Thorne, a portfolio manager at Crestview Advisors. "But it likely reflects concerns about fee pressure in the M&A advisory space and a 'wait-and-see' approach until the dealmaking environment meaningfully improves. The unchanged price targets tell you the pros aren't panicking."

The average price target held steady at US$206, with individual analyst valuations ranging from a bullish US$243 to a more cautious US$174 per share. This relatively narrow range suggests a consensus that the stock's path, while not without debate, is reasonably defined.

A deeper dive into the growth forecasts reveals a more optimistic undercurrent. Houlihan Lokey's projected 12% annualized revenue growth through 2027 marks a significant acceleration from its 7.3% average annual growth over the past five years. Furthermore, this outlook outpaces the 6.7% average annual growth forecast for the broader capital markets industry, positioning the firm as a potential outperformer.

"Accelerating growth in this market is no small feat," noted Dr. Anya Sharma, a finance professor at Kellerton University. "It suggests analysts believe Houlihan Lokey's focused restructuring and financial advisory services are gaining market share, which could be a powerful driver when the economic cycle turns."

However, not all observers are convinced. Leo Grant, an independent market commentator known for his critical stance, offered a blistering take: "This is classic 'muddle-through' mediocrity dressed up as stability. A 12% stock drop post-earnings is a verdict, not a blip. The firm is hostage to an IPO and M&A market that's on life support. Their 'accelerating' growth is just a spreadsheet fantasy until we see real deals closing."

The prevailing analyst conclusion is that Houlihan Lokey's prospects haven't materially shifted. Earnings and revenue forecasts are steady, and the price target is static. The key takeaway is an expectation of resilient, above-industry growth, albeit within a challenging environment for global investment banking.

For a detailed breakdown of Houlihan Lokey's valuation and analyst forecasts through 2028, visit our analysis platform.

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