Houlihan Lokey (HLI) Rides UK Dealmaking Revival On A Fair Value Gap

Resurgent UK dealmaking has put Houlihan Lokey (HLI) back on investor watchlists, with projected cross border M&A and restructuring activity tying the pure play adviser more closely to this transaction wave.

Houlihan Lokey’s share price tells a mixed story. The stock closed at US$129.07 after a 1-day share price gain of 1.24%, yet the year to date share price return is down 26.81% and the 1-year total shareholder return has declined 36.31%. However, the 3-year and 5-year total shareholder returns of 28.25% and 49.01% point to stronger longer term momentum that recent weakness has interrupted.

Fresh board appointments, a new Chief Legal Officer and the opening of a West Palm Beach office give investors concrete corporate events to weigh against that softer recent share price performance. The market is reassessing both Houlihan Lokey’s growth options and perceived risk profile in the context of resurgent UK and cross border deal activity.

Scan resurgent deal advisers such as Houlihan Lokey alongside other potential beneficiaries of the M&A rebound with our curated list of 16 high quality undiscovered gems.

Houlihan Lokey now trades at a clear discount to both analyst targets and one fair value estimate, even after the latest share price move. Is that a mispricing or is the market simply pricing in real risk?

Most Popular Narrative: 16% Undervalued

On the widely followed narrative view, Houlihan Lokey’s fair value sits at $153.50 compared with a last close of $129.07, which frames the current discount as significant while investors weigh recent deal momentum and cost pressures.

The main thing that has to go right is that Houlihan Lokey converts its record Corporate Finance pipelines and growing Capital Solutions and secondaries activity into completed higher fee transactions at a pace that outstrips rising non compensation costs and ongoing investment in technology and data.

The current numbers and valuation imply the market is not fully pricing in Houlihan Lokey’s record FY26 revenue of US$2.6b, 20% adjusted EPS growth to US$7.56, sustained 61.5% compensation ratio, leading M&A and restructuring deal counts, and expanding private capital and secondaries advisory franchise, so the stock appears undervalued.

See why 7 investors see Houlihan Lokey as 16% undervalued.

Result: Fair Value of $153.50 (UNDERVALUED)

Still, Houlihan Lokey’s story frays quickly if muted sponsor activity lingers or if non compensation costs keep rising faster than advisory fees.

Find out about the key risks to this Houlihan Lokey narrative.

Next Steps

That upbeat valuation story will not mean much until you have seen the underlying data yourself, so move quickly and weigh up the 3 key rewards.

Looking for more investment ideas beyond Houlihan Lokey?

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• Spot potential turnaround stories early and size them carefully by reviewing the 7 elite penny stocks with strong financials that match your risk tolerance and capital allocation style.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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