Houlihan Lokey
HLI
$128.06
-1.56%
Houlihan Lokey, Inc. is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructuring, valuation, and strategic consulting, serving corporations, institutions, and governments worldwide. The firm is a recognized leader in financial restructuring and a top-tier M&A advisor, particularly in the middle market, with a global footprint across the U.S., Europe, and Asia-Pacific. Currently, the stock is under pressure due to a challenging deal-making environment, with declining revenue and a sharp sell-off in 2026, while investors debate the timing of a recovery in advisory activity and the impact of ongoing market volatility on the firm's earnings power.…
HLI
Houlihan Lokey
$128.06
Investment Opinion: Should I buy HLI Today?
Based on the analysis, HLI is rated a Hold. The consensus analyst recommendation is 'Buy' with an average target price of $153.50, implying a 19.3% upside, but the stock's weak price momentum and declining revenue warrant caution. The thesis is that HLI is a high-quality franchise with a strong restructuring business, but the current market environment is challenging, and the stock may continue to face headwinds until M&A activity recovers.
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HLI 12-Month Price Forecast
The AI assessment is neutral, reflecting the balance between attractive valuation and persistent operational challenges. The forward PE suggests the market is pricing in a recovery, but the lack of concrete evidence of a turnaround keeps confidence at medium. If revenue growth turns positive and the stock shows signs of bottoming, the stance would upgrade to bullish. Conversely, further revenue declines and a break below the 52-week low would reinforce a bearish outlook.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Houlihan Lokey's 12-month outlook, with a consensus price target around $153.50 and implied upside of +19.9% versus the current price.
Average Target
$153.50
0 analysts
Implied Upside
+19.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$145 - $177
Analyst target range
The stock is covered by 8 analysts, with a consensus recommendation of 'Buy' and an average target price of $153.50, which implies an upside of approximately 19.3% from the current price of $128.68. The distribution of ratings is not provided, but the mean recommendation of 2.27 (where 1 is Strong Buy and 5 is Sell) indicates a moderately bullish stance. The high target of $177.00 suggests that some analysts see significant upside potential, likely assuming a recovery in M&A volumes and improved market conditions, while the low target of $145.00 still represents a 12.7% upside, indicating that even the most bearish analyst sees value at current levels.
Bulls vs Bears: HLI Investment Factors
The bull case for HLI rests on its strong franchise in restructuring, attractive forward valuation, and analyst consensus, which sees significant upside. The bear case is driven by persistent revenue declines, weak price momentum, and the cyclical risks inherent in investment banking. Currently, the bearish evidence appears stronger given the deteriorating financial performance and the stock's continued downtrend, but the forward PE suggests the market is pricing in a recovery. The most important tension is whether the decline in M&A activity is cyclical and temporary or structural, as this will determine if the current valuation is a bargain or a value trap.
Bullish
- Strong franchise in restructuring: Houlihan Lokey is a recognized global leader in financial restructuring, a segment that typically thrives during economic downturns. In Q4 FY2026, Financial Restructuring contributed $110.4 million in revenue, providing a counter-cyclical buffer as M&A activity remains subdued.
- Attractive forward valuation: The forward PE of 14.62x is significantly lower than the trailing PE of 22.44x, implying the market expects substantial earnings growth. With consensus EPS estimates of $9.68 for the next fiscal year, the stock is trading at a discount to its historical average, offering potential upside if earnings recover as anticipated.
- Analyst consensus Buy with upside: The stock has a consensus recommendation of 'Buy' with an average target price of $153.50, representing a 19.3% upside from the current price of $128.68. Even the lowest analyst target of $145.00 implies a 12.7% upside, indicating that analysts see value at current levels despite the recent sell-off.
- Solid profitability and margins: Despite revenue decline, the company maintains strong profitability with a net margin of 16.3% and an operating margin of 23.6% in the latest quarter. This demonstrates the firm's ability to manage costs effectively even in a challenging environment, supporting earnings resilience.
Bearish
- Persistent revenue decline: Revenue has been declining, with Q4 FY2026 revenue of $635.6 million down -4.62% year-over-year. The overall trend is uneven, with Q3 showing growth but Q2 and Q1 declining, indicating that the recovery in advisory activity is not yet sustainable.
- Sharp price decline and weak momentum: The stock has fallen 33.72% over the past year and 22.41% over the past six months, significantly underperforming the S&P 500, which gained 20.37% over the same period. The relative strength of -54.09% over one year highlights persistent selling pressure and a lack of investor confidence.
- High valuation on trailing earnings: The trailing PE of 22.44x is elevated for a company with declining revenue, and the PEG ratio of 4.26 suggests that the stock is expensive relative to its growth prospects. This leaves little room for error if earnings fail to recover as expected.
- Cyclicality of investment banking: The investment banking industry is highly cyclical, and HLI's earnings are sensitive to M&A volumes and capital markets activity. The current downturn in deal-making could persist, leading to further revenue and earnings pressure, as evidenced by the recent quarterly declines.
HLI Technical Analysis
The stock is in a clear downtrend, with a 1-year price change of -33.72% and a 6-month change of -22.41%. The current price of $128.68 sits at only 14.2% above the 52-week low of $112.83 and 39.2% below the 52-week high of $211.78, indicating that the stock is trading near the lower end of its range, reflecting persistent selling pressure and a lack of buyer conviction. The 52-week range positioning suggests that the market is pricing in significant headwinds, and the stock has not shown any meaningful base-building activity, which could signal further downside risk if support levels fail.
Beta
0.96
0.96x market volatility
Max Drawdown
-41.0%
Largest decline past year
52-Week Range
$113-$212
Price range past year
Annual Return
-33.6%
Cumulative gain past year
| Period | HLI Return | S&P 500 |
|---|---|---|
| 1m | -8.4% | +1.9% |
| 3m | -15.5% | +2.3% |
| 6m | -23.7% | +10.6% |
| 1y | -33.6% | +19.5% |
| ytd | -27.4% | +11.8% |
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HLI Fundamental Analysis
Revenue has been declining, with the most recent quarter (Q4 FY2026, ended March 31, 2026) showing revenue of $635.6 million, a -4.62% year-over-year decline. This follows a mixed trend: Q3 FY2026 revenue was $717.1 million (up from $634.4 million in the prior year quarter), but Q2 and Q1 showed sequential declines, indicating that the growth trajectory is uneven and currently decelerating. The Corporate Finance segment, which is the largest, generated $433.8 million in revenue, while Financial Restructuring contributed $110.4 million, but the overall decline suggests that M&A advisory activity remains subdued, offsetting strength in restructuring.
Quarterly Revenue
$635643000.0B
2026-03
Revenue YoY Growth
-4.6%
YoY Comparison
Gross Margin
98.7%
Latest Quarter
Free Cash Flow
$681819000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is HLI Overvalued?
Given that net income is positive, the PE ratio is the primary valuation metric. The trailing PE is 22.44x, while the forward PE is 14.62x, implying that the market expects earnings to grow significantly over the next year, which is consistent with the consensus EPS estimate of $9.68 for the next fiscal year. The gap between trailing and forward PE suggests that the market is pricing in a recovery in earnings, but the current earnings yield of 4.5% may not adequately compensate for the cyclical risks in the investment banking industry.
PE
22.4x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 16x~31x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant for HLI. The company has experienced a -4.62% year-over-year revenue decline in the latest quarter, and the overall trend is uneven, with sequential declines in Q2 and Q1. This indicates that the core advisory business is under pressure, and there is no clear sign of a sustained recovery. The net margin of 16.3% is healthy, but it could compress if revenue continues to fall while fixed costs remain. The debt-to-equity ratio is low at 0.21, providing some cushion, but the high payout ratio of 40.9% limits financial flexibility. Additionally, the company's earnings are highly sensitive to the cyclicality of M&A and capital markets, which could lead to further volatility in earnings and cash flow.
FAQ
The key risks for HLI include: 1) Financial risk: Revenue decline of -4.62% YoY could persist, leading to margin compression and lower earnings. 2) Market risk: The stock is highly cyclical and sensitive to M&A volumes, which are currently weak. 3) Competitive risk: The investment banking industry is competitive, and HLI may lose market share to larger or more agile competitors. 4) Macro risk: High interest rates and economic uncertainty could prolong the downturn. The most severe risk is a prolonged bear market in deal-making, which could cause the stock to fall to its 52-week low of $112.83, a -12.3% downside from the current price.
The 12-month forecast for HLI is mixed. The base case, with a 50% probability, sees the stock trading around $153.50, the analyst average target, implying a 19.3% upside. The bull case, with a 25% probability, targets $177, while the bear case, also with a 25% probability, could see the stock fall to $112.83. The most likely scenario is a gradual recovery in M&A activity, leading to moderate gains. However, the stock's recent performance suggests that the market is not yet convinced, and the forecast is highly dependent on the timing of a recovery.
HLI's valuation is mixed. On a trailing basis, the PE of 22.44x is above the market average, suggesting the stock is not cheap. However, the forward PE of 14.62x is significantly lower, indicating that the market expects earnings to grow substantially in the next year. The PEG ratio of 4.26 is high, implying that the stock is expensive relative to its growth rate. Overall, the stock appears fairly valued to slightly undervalued if the earnings recovery materializes, but overvalued if the decline continues. The market is pricing in a strong rebound in earnings, which is a key risk.
HLI is not a clear buy at current levels due to the ongoing revenue decline and weak price momentum. However, the forward PE of 14.62x and analyst consensus target of $153.50 suggest a potential 19.3% upside, making it an attractive opportunity for patient investors who believe in a recovery in M&A activity. The stock is suitable for investors with a high risk tolerance and a long-term horizon, but those seeking near-term gains may be disappointed. The biggest downside risk is a prolonged downturn in deal-making, which could push the stock towards its 52-week low of $112.83.
HLI is better suited for long-term investment rather than short-term trading. The stock has a beta of 0.963, indicating it moves in line with the market, but its high cyclicality makes it volatile. The company's strong franchise in restructuring and M&A advisory provides a solid foundation for long-term growth, but the current downturn could persist for several quarters. Investors should be prepared to hold the stock for at least 12-18 months to see a meaningful recovery. The dividend yield of 1.82% provides some income, but the payout ratio of 40.9% suggests limited growth in dividends. Short-term traders may find better opportunities elsewhere given the stock's downtrend.