Needham lowers Alight Solutions stock price target to $6 on growth concerns

Published 06/08/2025, 12:08
Needham lowers Alight Solutions stock price target to $6 on growth concerns

Investing.com - Needham lowered its price target on Alight Solutions (NYSE:ALIT) stock to $6.00 from $8.00 on Wednesday, while maintaining a Buy rating following the company’s second-quarter results. The stock, currently trading at $4.19, near its 52-week low of $4.08, appears undervalued according to InvestingPro analysis.

The research firm noted that Alight delivered solid second-quarter performance, exceeding estimates for both revenue and earnings. This outperformance was attributed to stronger recurring revenue growth and effective operating expense management. The company, with a market capitalization of $2.22 billion, maintains a healthy current ratio of 1.18 and trades at an attractive Price/Book multiple of 0.52.

Despite the positive quarterly results, Alight reduced its fiscal year 2025 revenue guidance due to lengthening deal cycles during the quarter. Needham believes this guidance cut was responsible for the significant sell-off in Alight shares on Tuesday.

Alight reaffirmed its guidance for EBITDA, EPS, and free cash flow despite the revenue adjustment. The company also announced a new partnership with Goldman Sachs Asset Management, which will serve as sub-advisor for Defined Contribution and IRA solutions on the Alight Worklife platform.

Needham expressed confidence that while the near-term growth outlook is disappointing, Alight remains on track to achieve its medium-term growth targets outlined at the company’s analyst day earlier this year.

In other recent news, Alight Inc. announced its Q2 2025 earnings, reporting a revenue of $528 million, which slightly exceeded forecasts. However, the company’s earnings per share (EPS) came in at $0.10, falling short of the expected $0.11. A major development in this earnings report was the disclosure of a significant $983 million goodwill impairment charge. This charge has raised concerns among investors regarding the company’s financial health. Despite the revenue increase, the mixed financial results highlight challenges that Alight is currently navigating. These recent developments reflect the company’s ongoing efforts to manage its financial landscape amid market expectations.

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