Market Overview

Hackett Group Higher On Midday Upgrade


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.

The Analyst

Roth Capital Partners' Jeff Martin.

The Rating

Upgraded shares from Neutral to Buy and raised its price target from $16 to $20.

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.

Latest Ratings for HCKT

Nov 2017UpgradesNeutralBuy
Jun 2017Initiates Coverage OnBuy
May 2017DowngradesBuyHold

View More Analyst Ratings for HCKT
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Posted-In: Jeff Martin ROTH Capital PartnersAnalyst Color Upgrades Price Target Analyst Ratings


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