Jobs data shock and private credit jitters weigh on Houlihan Lokey (HLI)

Houlihan Lokey (HLI) has come under pressure after weak US February jobs data sparked a sell-off in financial stocks, while JPMorgan Chase's tighter lending to private credit providers added further sector stress.

Those headline shocks have hit recent momentum hard, with a 7 day share price return of 7.7% and a 30 day decline of 18.1%. The year to date move of 20.9% contrasts with a 3 year total shareholder return of 61.1% and a 5 year total shareholder return of 128.3%. This suggests long term holders have seen stronger results than recent buyers as sentiment has cooled around near term deal activity and perceived sector risk.

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With Houlihan Lokey now trading at a discount to both analyst targets and some intrinsic estimates after a sharp pullback, the key question is whether this weakness represents a genuine opening or whether the market is already accounting for future growth.

Most Popular Narrative: 33.9% Undervalued

Against a last close of $139.42, the most followed narrative places Houlihan Lokey’s fair value at about $210.86, setting up a wide valuation gap for investors to assess.

Ongoing global expansion, sector diversification, and talent recruitment position Houlihan Lokey for sustained revenue growth and increased market share. Strong pipelines from succession planning, resilient restructuring activity, and enhanced client engagement are stabilizing fee income and supporting earnings despite macroeconomic shifts.

Want to see what underpins that gap between price and fair value? The narrative focuses on steady double digit top line growth, firmer margins, and a richer future earnings multiple. Curious how those ingredients combine into a $210.86 figure and what discount rate is used in the model? The full narrative lays out the assumptions in black and white.

Result: Fair Value of $210.86 (UNDERVALUED)

However, those assumptions rely heavily on US deal activity and tight cost control, so weaker M&A volumes or rising compensation could quickly challenge that optimistic narrative.

Next Steps

Given the mix of concern and optimism around Houlihan Lokey, it may be useful to promptly review the situation in more detail for yourself, starting with 5 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.