On Friday, Keefe, Bruyette & Woods adjusted their outlook on Hamilton Lane Inc . (NASDAQ:HLNE), a private markets investment management firm. The price target for the company's stock has been reduced to $167.00 from the previous target of $215.00. Despite this change, the firm has maintained a Market Perform rating for Hamilton Lane.
The revision comes after Hamilton Lane's shares experienced significant underperformance compared to its peers in the alternative investment group. Since reaching its 52-week peak on November 12, 2023, the company's stock declined by 22.54%, while the average decline in the broader Alts group was only 2.62%. InvestingPro analysis indicates the stock's RSI is currently in oversold territory, with seven analysts recently revising their earnings expectations downward.
Analysts have identified two primary concerns that have likely contributed to investor apprehension. The first is the impact of equity-based compensation on financial estimates, following Hamilton Lane's recent issuance of a $150 million equity retention package.
This package is set to be recognized over a five-year period, adding approximately $30 million per year to expenses, which may not have been fully accounted for in current estimates. The second concern revolves around observed slowing net flows, particularly noted net outflows in October from the company's mature, international evergreen product, GPA.
These factors have prompted Keefe, Bruyette & Woods to revise their future earnings estimates for Hamilton Lane. The firm now expects Hamilton Lane to report earnings per share (EPS) of $1.07 for the third fiscal quarter of 2025, down from the previous estimate of $1.15. Additionally, the EPS forecasts for fiscal years 2026 and 2027 have been adjusted to $5.39 (from $5.73) and $6.17 (from $6.56), respectively.
The new price target of $167.00 is based on a sum-of-the-parts analysis and represents a multiple of 27.0 times the firm's fiscal year 2027 EPS estimate.
This adjustment reflects the increased equity-based compensation expenses factored into the firm's model, as well as the anticipated impact on Hamilton Lane's financial performance.
In other recent news, Hamilton Lane Incorporated has announced its fiscal second quarter earnings for 2025.
Led by John Oh, Head of Shareholders, and featuring Co-Chief Executive Officer Erik Hirsch and Chief Financial Officer Jeff Armbrister, the company provided forward-looking statements and highlighted the significance of non-GAAP measures in evaluating performance. These recent developments indicate a forward-thinking approach, albeit with a mindful acknowledgment of potential risks and uncertainties.
The company also issued a press release and slide presentation, suggesting a comprehensive approach to its earnings disclosure. Despite this, no specific mention of any underperformance or misses was disclosed in the earnings call summary. It's important to note that these are just projections and actual results may differ due to various factors.
Analysts have been keenly watching these developments, and the company's discussion of plans and objectives has suggested a positive outlook on its financial position and operations. However, the company remains cautious about potential challenges that could impact its projected outcomes.
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