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On Friday, DA Davidson adjusted its outlook on Hirequest Inc. (NASDAQ:HQI), reducing the price target from $20.00 to $16.00, while retaining a Buy rating on the company’s stock. With the stock currently trading at $12.51, analysts see potential upside, with targets ranging from $16 to $18. According to InvestingPro data, the company maintains a GOOD financial health score, supported by strong liquidity metrics. The revision follows Hirequest’s fourth-quarter sales report, which revealed figures falling short of market expectations.
Hirequest reported fourth-quarter sales of $8.1 million, a decrease of 17.2% compared to the same period the previous year, and below the consensus estimate of $9.3 million. The shortfall was attributed to a decline in the company’s executive search business and the impact of unfavorable holiday timing. Despite the sales miss, Hirequest’s adjusted EBITDA came in at $3.8 million, which, although below the consensus of $4.7 million, was less impacted due to effective expense management, especially in workers’ compensation costs. InvestingPro analysis reveals the company maintains an impressive 100% gross profit margin and operates with a moderate level of debt, with a healthy current ratio of 1.68.
The company’s direct staffing business saw a modest decline of 1.2% for the quarter, outperforming the industry average, which saw a 6% decrease. DA Davidson’s revised price target of $16.00 is based on an 11x multiple of their 2026 EBITDA estimate. The firm has lowered its estimates in response to the reported earnings miss and the commentary indicating continued weakness in the first quarter of 2025. For deeper insights into Hirequest’s valuation and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s financial metrics and growth potential.
Despite the reduction in the price target and the recent performance issues, DA Davidson remains optimistic about Hirequest’s long-term prospects. The firm highlighted Hirequest’s ability to deliver improved profitability more rapidly due to its relatively fixed selling, general, and administrative (SG&A) expenses, once the market conditions improve. Therefore, DA Davidson has reiterated its Buy rating, signaling confidence in the company’s future performance.
In other recent news, Hirequest Inc. reported a notable decline in revenue for the fourth quarter of 2024, with earnings falling short of expectations. The company announced Q4 revenue of $8.1 million, a decrease of 17.2% compared to the previous year, and missed its revenue forecast of $9.2 million. Net income for the quarter was reported at $2.2 million, or $0.16 per diluted share. Despite the revenue shortfall, Hirequest maintained a strong adjusted EBITDA margin of 47%. The staffing industry continues to face significant challenges, which were reflected in the company’s financial performance. Analysts from Barrington Research and D.A. Davidson discussed the demand environment and noted potential acquisition opportunities for Hirequest. The company remains optimistic about market recovery in 2025 and is exploring cost management strategies and acquisition opportunities to enhance its business operations.
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