BMO Capital increased its 12-month price target on Houlihan Lokey (NYSE:HLI) to $211.00 from $209.00, reaffirming an Outperform rating on the investment bank's shares. The revised target implies potential upside relative to HLI's then-current share price of $180.53, though InvestingPro metrics indicate the stock is trading above its calculated Fair Value.
The analyst move followed Houlihan Lokey's fiscal third-quarter 2026 financial report, which delivered adjusted earnings per share of $1.94. That result exceeded BMO's internal estimate of $1.86 and the consensus figure cited by BMO of $1.87. Separately, other coverage referenced in the company's reporting cycle noted the adjusted EPS of $1.94 against a forecast of $1.88.
Revenue for the quarter came in at $717 million, outpacing an anticipated $696.65 million. BMO attributed the EPS beat in part to stronger-than-expected revenue, which produced roughly a $0.06 positive impact versus consensus assumptions. The firm also singled out the performance of Houlihan Lokey's restructuring business - referred to as RX - as the primary driver of the upside, with the RX segment offsetting modest shortfalls in corporate finance and financial valuation advisory lines.
Despite the favorable top- and bottom-line surprises, BMO flagged a slightly higher-than-expected level of non-compensation expenses during the quarter. Those costs created an approximate $0.04 headwind relative to forecasts and prompted BMO to suggest that non-compensation expense growth could accelerate faster in fiscal 2026 than previously modeled.
Operationally, Houlihan Lokey continues to demonstrate solid profitability metrics. The firm reported a gross profit margin of 94.6% and a return on equity of 20%. Over the trailing twelve months, revenue growth reached 21%, bringing total revenues to $2.57 billion.
On business outlooks, BMO described the corporate finance segment's prospects as "very bullish." The restructuring revenue outlook was left unchanged by the firm, accompanied by a note that restructuring revenue is likely to decelerate in the next fiscal year. These segment-level views underpinned BMO's calibrated upward adjustment to its price target while maintaining the stock's Outperform stance.
From a market valuation standpoint, InvestingPro analysis highlighted that HLI carries a market capitalization of $12.65 billion and trades at a price-to-earnings ratio of 29.17. That multiple places the stock at a premium relative to near-term earnings growth, according to InvestingPro's assessment.
The fiscal third-quarter results and the subsequent analyst update have attracted attention among investors and market watchers. The company-reported metrics and the analyst commentary together shaped BMO's decision to nudge its target higher while leaving the rating unchanged. Investors seeking additional, in-depth coverage can access HLI's full Pro Research Report through InvestingPro, which the platform notes is one of over 1,400 research reports available for major U.S. equities.
In summary, Houlihan Lokey's most recent quarter delivered better-than-expected EPS and revenue, driven chiefly by restructuring activity and supported by healthy revenue growth over the prior year. Offsetting those positives were slightly elevated non-compensation costs and the prospect of slowing restructuring revenue in the next fiscal year, factors that keep the company's near-term margin trajectory and expense profile under observation.
Note on reporting: The company's reported adjusted EPS, revenue figures, segment commentary, and BMO's price-target revision are included as they were disclosed in the public filings and subsequent analyst coverage.