Bullish indicating open at $55-$60, IPO prices at $37
On Monday, DA Davidson reaffirmed its Buy rating and $10.00 price target on Alight Solutions (NYSE:ALIT), following the company’s fourth-quarter earnings report. While Alight’s revenue of $2.33 billion and adjusted EBITDA of $368 million for the quarter fell slightly short of analyst Peter Heckmann’s expectations, InvestingPro analysis suggests the stock is currently undervalued, trading well below its Fair Value. In response to the financial results, Alight’s management provided guidance for 2025, projecting an adjusted EBITDA increase of 4% to 9% year-over-year, reaching between $620 million and $645 million. This growth is anticipated to benefit from $55 million in annual savings due to a restructuring program.
The company’s outlook comes amid significant changes within its senior management team. DA Davidson sees the year 2025 as a pivotal transition period for Alight, during which the new leadership will aim to establish a consistent record of solid quarterly performance. The guidance has led DA Davidson to adjust its own financial forecasts for Alight Solutions.
Despite the earnings miss and the subsequent adjustments to projections, DA Davidson remains confident in Alight’s potential. The firm’s analyst has chosen to keep the Buy rating intact, signaling a continued positive outlook on the company’s stock. This aligns with the broader analyst consensus, as InvestingPro data shows price targets ranging from $8 to $12, suggesting significant upside potential. While not currently profitable, analysts expect the company to return to profitability this year, with an EPS forecast of $0.61 for 2025.
Alight Solutions’ financial guidance indicates a strategic plan to improve performance over the next few years. The restructuring program is expected to contribute significantly to the company’s financial health, as reflected in the adjusted EBITDA forecast for 2025. With the new management team at the helm, Alight aims to navigate this transition year successfully and deliver on its financial targets.
In other recent news, Alight, Inc. has declared a quarterly cash dividend of $0.04 per share on its Class A Common Stock, scheduled for payment on March 17, 2025, to shareholders of record by March 3, 2025. This dividend declaration reflects Alight’s commitment to providing value to its shareholders. In a related financial development, Cannae Holdings (NYSE:CNNE) sold 12 million shares of Alight’s common stock to meet liquidity requirements, a move emphasized as strategic rather than a loss of confidence in Alight’s future by William P. Foley, II, Chairman of the Board for both Cannae and Alight. Additionally, Alight has undergone significant changes to its Board of Directors, with Russell P. Fradin appointed as the new Chairman, effective March 1, 2025, as part of a collaboration with Starboard Value, LP.
Furthermore, Alight announced the promotion of Allison Bassiouni to Chief Delivery Officer and Deepika Duggirala to Chief Technology Officer, effective January 1, 2025, as part of its ongoing transformation efforts. JPMorgan analysts maintained a Neutral rating on Alight Solutions, with a steady price target of $8.00, citing a conservative outlook on nonrecurring project revenue and the pace of new bookings. Despite this, the firm anticipates growth for Alight in 2025, aligning with the company’s management commentary. These developments illustrate Alight’s strategic moves in leadership and financial management, aimed at supporting its growth objectives and shareholder value.
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