Last week, you might have seen that Houlihan Lokey, Inc. (NYSE:HLI) released its quarterly result to the market. The early response was not positive, with shares down 2.7% to US$98.43 in the past week. It was a workmanlike result, with revenues of US$467m coming in 2.0% ahead of expectations, and statutory earnings per share of US$0.99, in line with analyst appraisals. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Houlihan Lokey

Taking into account the latest results, the current consensus from Houlihan Lokey's seven analysts is for revenues of US$1.89b in 2024. This would reflect an okay 5.9% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 8.2% to US$3.94. Before this earnings report, the analysts had been forecasting revenues of US$1.89b and earnings per share (EPS) of US$4.26 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$108, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Houlihan Lokey at US$124 per share, while the most bearish prices it at US$88.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Houlihan Lokey's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.9% per year. So it's pretty clear that, while Houlihan Lokey's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Houlihan Lokey. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$108, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Houlihan Lokey. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Houlihan Lokey analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Houlihan Lokey that you should be aware of.

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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.