“Keefe Bruyette maintains an outperform rating on Houlihan Lokey with a $228 price target, citing a constructive economic environment in 2026 that could boost M&A and restructuring activities. The firm’s analysis highlights potential upside from stabilizing markets and increased deal flow, positioning HLI for growth amid favorable conditions.”
Analyst Views Constructive Path Ahead for HLI in 2026
Houlihan Lokey, a prominent investment banking firm focused on mergers and acquisitions, capital markets, and financial restructuring, stands to benefit from an anticipated uptick in advisory services as economic conditions improve. Keefe Bruyette’s recent adjustment keeps the stock at an outperform, with the revised target suggesting over 27% potential gains from the current trading level around $178.
The brokerage points to broader market dynamics, including expected interest rate stability and reduced volatility, as key drivers for heightened corporate transactions. In a sector where deal volumes have fluctuated due to prior macroeconomic pressures, this outlook underscores Houlihan Lokey’s diversified revenue streams—spanning corporate finance, financial advisory, and valuation services—that could capture rising demand.
Recent quarterly performance bolsters this view, with Houlihan Lokey reporting adjusted earnings per share of $1.84, surpassing estimates by 8%, on revenues of $659 million, up 15% year-over-year. Corporate finance, the largest segment, grew 21%, reflecting resilient client engagement in M&A despite uneven global growth.
Looking ahead, analysts anticipate a rebound in distressed credit and equipment finance sectors, where Houlihan Lokey holds strong expertise. With a robust backlog of deals, the firm is well-placed to advise on complex restructurings and capital raises, potentially accelerating fee income in a more permissive lending environment.
Institutional interest remains high, with major holders like Vanguard Group increasing stakes, now controlling over 5 million shares. This confidence aligns with consensus forecasts projecting earnings growth to around $6 per share for the fiscal year, driven by expanded operations in Europe and Asia.
Market multiples for HLI trade at about 28 times forward earnings, a premium justified by its consistent profitability and low debt profile. Compared to peers like Moelis or Evercore, Houlihan Lokey’s emphasis on mid-market deals offers insulation from mega-merger slowdowns, allowing agility in navigating sector-specific opportunities.
As regulatory scrutiny eases in certain industries, such as technology and healthcare, Houlihan Lokey could see amplified advisory roles in cross-border transactions. The firm’s recent acquisitions, enhancing its tech and private capital advisory, further equip it to capitalize on these trends.
Overall trading volume for HLI has averaged 200,000 shares daily, with the stock up roughly 30% year-to-date, outperforming broader financial indices. Volatility measures, like a beta of 0.7, indicate relative stability, appealing to conservative investors seeking exposure to investment banking recovery.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendations, or endorsements. Readers should conduct their own research and consult qualified professionals before making decisions.