On Friday, DA Davidson adjusted its price target on Hirequest Inc. (NASDAQ: HQI) shares, reducing it to $19.00 from the previous $23.00, while maintaining a Buy rating on the stock.
The staffing company's first-quarter sales for 2024 were reported at $8.4 million, closely matching DA Davidson's projection of $8.5 million. Despite a year-over-year decline in organic sales, the firm noted that Hirequest's performance was relatively better than that of its competitors.
Hirequest's EBITDA for the quarter stood at $3.4 million, which was also in line with the analyst's estimate of $3.3 million. This result was attributed to lower SG&A expenses due to reduced workers' compensation charges, which came in below expectations.
Additionally, the company has managed to cut SG&A expenses excluding workers' compensation by 13% compared to the previous year, aided by lower salaries from a reduced headcount.
The analyst pointed out that while the current market conditions are challenging for staffing companies, Hirequest appears to be outperforming its peers, potentially leading to market share gains.
The company's profitability is also highlighted as being superior to that of its competitors, positioning it favorably for continued growth through its acquisition strategy.
The revised price target of $19 is based on a 15x multiple of the firm's estimated EBITDA for the year 2025. Despite the decrease in the price target, DA Davidson reaffirms its confidence in Hirequest's business model and prospects, as evidenced by the reiteration of the Buy rating.
InvestingPro Insights
In light of DA Davidson's recent price target adjustment for Hirequest Inc. (NASDAQ: HQI), real-time data from InvestingPro provides additional context for investors considering the staffing company's stock. With a market capitalization of $179.78 million and a healthy P/E ratio that has adjusted down to 19.83 from the last twelve months as of Q4 2023, Hirequest's financial health appears robust. The company's revenue growth of 22.39% over the same period signals a strong upward trajectory, despite the challenges faced by the staffing industry.
Two notable InvestingPro Tips for Hirequest include the company's liquid assets exceeding short-term obligations and its operation with a moderate level of debt, suggesting a solid financial foundation. Moreover, analysts predict profitability for the current year, and the company has been profitable over the last twelve months, reinforcing the optimistic outlook presented by DA Davidson.
Investors seeking further insights can find additional InvestingPro Tips at https://www.investing.com/pro/HQI, including the company's strong return over the last five years. For those interested in a deeper dive into Hirequest's potential, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where 5 more tips await to inform your investment decisions.
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