On Friday, Truist Securities updated its outlook on shares of Korn/Ferry (NYSE:KFY), raising the firm's price target on the stock to $84 from the previous $78 while maintaining a Buy rating.
Currently trading at $72.08, the stock has experienced a significant 8% decline over the past week, according to InvestingPro data. The adjustment followed Korn/Ferry's mixed financial results for the second quarter of fiscal year 2025 and its forecast, which fell short of third-quarter consensus expectations.
The company's shares experienced a downturn in the afternoon trading session after the announcement. In response to the report and future guidance, Truist Securities revised its adjusted earnings per share (EPS) estimate for the full fiscal year 2025 to $4.77, down from the earlier projection of $4.86.
Despite the near-term challenges, InvestingPro analysis shows the company maintains strong financial health with a 'Good' overall score and robust cash flows that sufficiently cover interest payments.
The revision was primarily due to the lower than expected guidance for the third quarter and the presumption that demand in the fourth quarter would remain consistent with November's levels.
Korn/Ferry's management has indicated that demand has been relatively stable in comparison to the past few months. Moreover, they shared a cautiously optimistic outlook regarding emerging opportunities, referred to as "greenshoots," in the Recruitment Process Outsourcing (RPO) segment, which could signal potential areas of growth.
The decision by Truist Securities to increase Korn/Ferry's price target is based on higher market multiples observed among Human Capital industry peers. This suggests a positive view of the sector's valuation trends and Korn/Ferry's position within the market.
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