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On Tuesday, DA Davidson reaffirmed their positive stance on Alight Solutions (NYSE:ALIT), maintaining a Buy rating and a $10.00 price target. The firm’s analyst, Peter Heckmann, reflected on Alight’s fourth-quarter performance, noting that both total revenue and adjusted EBITDA fell slightly short of their projections. Currently trading at $6.19, near its 52-week low of $5.87, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $8 to $12. Despite this, Alight’s management has provided financial guidance for 2025, anticipating an adjusted EBITDA increase of 4% to 9% year-over-year, reaching between $620 million and $645 million.
The expected growth in adjusted EBITDA is partly due to the implementation of a restructuring program projected to save $55 million annually. Heckmann observed that 2025 is likely to be a transitional period for Alight, as the company has recently undergone significant changes in its senior management team. This year will be crucial for the new leadership to establish a consistent record of delivering solid quarterly results.
Following the company’s update, DA Davidson has slightly adjusted their forecasts for Alight. However, the firm’s conviction in their Buy rating remains unshaken, with the $10 price target staying in place. This target suggests that DA Davidson continues to see potential in Alight’s stock despite the recent adjustments to their financial estimates.
Alight’s guidance and the subsequent endorsement from DA Davidson come at a time when the company is navigating through organizational changes and setting the stage for future performance. Investors will be looking to see if the new management can deliver on the promised financial improvements and drive the company’s growth as forecasted.
In other recent news, Alight Inc. has outlined its mid-term financial goals, projecting an annual revenue growth rate of 4-6% by 2027 and an adjusted EBITDA margin of approximately 30%. The company also forecasts generating about $1 billion in cumulative free cash flow from 2025 to 2027. DA Davidson has maintained its Buy rating on Alight, setting a price target of $10, despite the company’s recent earnings falling short of expectations. The firm anticipates an adjusted EBITDA increase of 4% to 9% year-over-year in 2025, aided by $55 million in savings from a restructuring program.
Additionally, Alight announced significant changes to its Board of Directors, appointing Russell Fradin as the new Chairman, effective March 1, 2025. This move is part of a collaboration with Starboard Value, LP, Alight’s largest shareholder, to enhance board leadership. The company has also declared a quarterly cash dividend of $0.04 per share for its Class A Common Stock, scheduled for payment on March 17, 2025, to shareholders on record by March 3, 2025.
Meanwhile, JPMorgan analysts have maintained a Neutral rating on Alight, with a price target of $8. They have adjusted their revenue growth expectations for a slower start to 2025, citing a conservative outlook on nonrecurring project revenue and new bookings. Despite this cautious stance, JPMorgan still foresees growth for Alight in 2025, in line with the company’s management commentary.
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