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The Hackett Group, Inc. (NASDAQ:HCKT), which had a so-so session until mid-day on Thursday, spiked sharply following an upgrade by Roth Capital Partners.
The upgrade came after the release of third-quarter results by the IP-based strategic consultancy and enterprise benchmarking and best practices implementation firm.
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The Analyst
Roth Capital Partners' Jeff Martin.
The Rating
Upgraded shares from Neutral to Buy and raised its price target from $16 to $20.
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The Thesis
The upgrade is premised on the view that Hackett can return to favorable comparisons in the first quarter of 2018, Martin said in a note. The analyst expects the 2018 operating leverage to exceed historical levels, given a more favorable mix, with contributions from Cloud and IP-as-a-Service.
Reviewing the results, Martin said Hackett's third-quarter net revenues, which fell 1 percent, was at the high-end of the management guidance and exceeded his expectations. Pro forma earnings per share also came in at the high-end of the guidance.
Roth Capital expects year-over-year comparisons to strengthen throughout 2019, as the rate and smaller size of decline in the on-premise is offset by rapid growth and the expanding size of the Cloud business.
"We expect an 4Q18 growth rate improving to 6.4% y/y, where we believe operating leverage will be apparent," the firm said.
Roth sees upside risk to its estimates if a seven-figure deal in Cloud materializes. This, according to the firm, could push the stock past its $20 price target.
The Price Action
At time of writing, shares of Hackett were up 2.44 percent at $15.22.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.