Houlihan Lokey, Inc. (NYSE: HLI) reported first-quarter adjusted earnings per share of $1.35, missing the analyst consensus estimate of $1.72 by 21.51 percent. The investment bank’s revenues for the quarter ended June 30, 2026, totaled $511 million, falling short of the $629.957 million forecast by 18.88 percent. This represents a 15.59 percent decline from the $605.349 million reported in the same period last year. The miss underscores significant headwinds in the Corporate Finance segment, driven by Middle East instability and software sector disruptions, which management describes as temporary rather than cyclical.

The Board of Directors declared a regular quarterly cash dividend of $0.70 per share for Class A and Class B common stock, payable on September 15, 2026, to stockholders of record as of September 1, 2026. During the quarter, the company repurchased 348 thousand shares under its share repurchase program. As of June 30, 2026, Houlihan Lokey held $797 million in cash, cash equivalents, and investment securities.

Segment Performance

Corporate Finance revenues decreased 24% to $303 million from $398 million, primarily due to a lower average transaction fee on closed transactions driven by mix shifts. Financial Restructuring revenues dipped 8% to $119 million from $128 million, as fewer closed transactions offset higher average fees. Conversely, Financial and Valuation Advisory revenues rose 13% to $89 million from $79 million, supported by increased Fee Events across service lines.

Operating Expenses and Margins

Total operating expenses were $433 million, down from $515 million in the prior year. Compensation expenses declined to $328 million from $393 million, resulting in a compensation ratio of 64.3%, slightly improved from 64.9%. Non-compensation expenses fell to $105 million from $122 million, aided by decreases in acquisition contingent consideration revaluation and depreciation, partially offset by higher professional fees.

Adjusted non-GAAP net income was $91 million, or $1.35 per diluted share, compared with $148 million, or $2.14 per diluted share, in the prior year. Adjusted compensation expenses were $314 million, maintaining a stable adjusted compensation ratio of 61.5% against the prior year’s 61.5%.

What the Numbers Show

The divergence between GAAP and adjusted metrics highlights the impact of acquisition-related costs on reported profitability. While GAAP net income fell 20%, the larger 39% drop in adjusted net income suggests that core operational performance faced significant pressure beyond one-time items. The effective tax rate rose sharply to 9.8% from 0.5%, primarily due to decreased stock-based compensation deductions, which reduced tax benefits available to the company in the current period.

Houlihan Lokey has received updated analyst assessments, with Keefe, Bruyette & Woods and Morgan Stanley lowering their price targets while maintaining positive ratings, and UBS offering a modest increase with a neutral stance. The divergent views reflect varying perspectives on the financial advisory firm's valuation and near-term prospects.

Analyst Ratings and Price Targets

Keefe, Bruyette & Woods analyst Alex Bond maintained an Outperform rating on Houlihan Lokey but reduced the price target from $172 to $160. Morgan Stanley analyst Ryan Kenny also kept an Overweight rating, lowering the price target from $193 to $187. Separately, UBS analyst Michael Brown retained a Neutral rating while increasing the price target marginally from $160 to $161.

The following table summarizes the latest analyst positions on Houlihan Lokey:

Diverging Outlooks

Keefe, Bruyette & Woods' Outperform rating signals continued confidence in Houlihan Lokey's long-term potential, despite the $12 reduction in the price target to $160. Morgan Stanley's $6 cut to $187 similarly suggests a recalibration of near-term expectations without altering the overall bullish thesis. In contrast, UBS maintains its Neutral stance, with the $1 uptick to $161 indicating only a minor shift in assessment. Together, these ratings provide investors with a comprehensive view of current institutional sentiment.