On Monday, Truist Securities maintained a Buy rating on Huron Consulting Group (NASDAQ:HURN), with a steady price target of $140.00. The firm's stance comes after investor meetings with Huron's CEO Mark Hussey and CFO John Kelly, which took place in Boston and Chicago last week.
Huron Consulting Group is recognized for its dominant positions in Healthcare and Higher Education consulting. Additionally, the company is developing a profitable digital offshore operation.
The financial institution highlighted Huron's significant valuation discount in comparison to its peers. Huron is currently valued at 11 times its enterprise value to forward 12-month EBITDA, including free cash flow (FCF). This is in contrast to the 18 times average for the firm's consulting sector coverage. Moreover, Huron's valuation stands below its 5-year average of 15 times and the 19 times multiple it held before the pandemic.
Truist's price target of $140 for Huron Consulting Group is based on an assumed 14 times multiple. This valuation reflects the firm's positive view of Huron's market position and financial prospects. The company's leading share in key consulting segments and its expanding digital capabilities have been significant factors in Truist's assessment.
The financial analysis firm's reiteration of the Buy rating indicates confidence in Huron's business model and its ability to maintain a strong position in its industry. The price target suggests that Huron's stock has the potential to reach a valuation more in line with the broader consulting market and its historical averages.
In other recent news, Huron Consulting Group showcased strong growth in its Q1 2024 report, with a 12% increase in revenue, reaching $356 million. The rise is credited to robust performances in the healthcare and education segments. The company's net income grew to $18 million, up from $13.4 million the previous year, while adjusted EBITDA increased to $33.8 million from $29.5 million.
In light of these developments, Huron has raised its adjusted EPS guidance for the year, indicating confidence in sustained growth.
The company's healthcare segment was notably strong, contributing 51% of total revenues with a 21.3% increase. Huron also plans capital deployment for share repurchases, debt repayment, and targeted M&A activities. Despite some clients expressing caution due to macroeconomic uncertainty, Huron maintains its financial goals of double-digit annual revenue growth and expanding adjusted EBITDA margins.
The company also reported a 41% increase in headcount since the end of 2021, indicating a strong team and collaborative culture.
InvestingPro Insights
Recent market data for Huron Consulting Group (NASDAQ:HURN) suggests a mixed financial landscape. While the company's P/E ratio stands at 26.9, indicating a premium valuation, the adjusted P/E ratio for the last twelve months as of Q1 2024 is more favorable at 16.89. This adjustment aligns with the company's strong revenue growth of 17.63% during the same period, showcasing Huron's ability to expand its earnings efficiently. Additionally, the return on assets of 5.19% points to effective use of company assets to generate profits.
On the strategic front, one of the InvestingPro Tips highlights that management has been aggressively buying back shares, which can reflect confidence in the company's future and can often lead to an increase in shareholder value. Furthermore, another tip to consider is that analysts predict the company will be profitable this year, aligning with the positive outlook presented by Truist Securities. These insights, coupled with the significant return over the last week of 8.31%, may influence investor sentiment and market performance.
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