What Happened?
Shares of human capital management provider Alight (NYSE: ALIT) fell 3.7% in the morning session after investors continued to the company's recent quarterly earnings report, which missed analyst expectations on both profit and revenue.
The company posted earnings per share of $0.12, falling short of the consensus estimate of $0.13. Revenue for the quarter was $533 million, which was below the anticipated $539.43 million and represented a 4.0% decrease compared to the same period in the previous year. In the wake of the results, analysts at Wedbush and UBS Group lowered their price targets on the stock. Wedbush reduced its target to $5.00 from $7.00, and UBS Group cut its target to $4.00 from $6.50, signaling reduced confidence following the financial update.
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What Is The Market Telling Us
Alight’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock gained 4.5% on the news that the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation.
The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, slightly more than economists expected. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market. As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
Alight is down 67.3% since the beginning of the year, and at $2.21 per share, it is trading 72.7% below its 52-week high of $8.09 from November 2024. Investors who bought $1,000 worth of Alight’s shares at the IPO in July 2021 would now be looking at an investment worth $244.19.
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