Truist raises Heidrick & Struggles price target on strong sector data

Truist Securities raised its price target on Heidrick & Struggles (HSII) to $46 from $44, maintaining a Hold rating, based on competitor Korn Ferry's (KFY) positive results and commentary indicating sequential improvement in the executive search market during May. This positive outlook offsets concerns about cyclical demand. HSII's Q1 2025 revenue beat expectations at $284 million, though EPS slightly missed, and the company projects Q2 revenue between $285 million and $305 million, targeting mid to high single-digit organic revenue growth.

Analysis

Truist Securities has revised its price target for Heidrick & Struggles (NASDAQ:HSII) upwards to $46.00 from $44.00, reflecting an increased 2026 estimated EBITDA multiple to 6.6x from 6.3x, while notably maintaining a Hold rating and keeping its underlying financial estimates for HSII unchanged. This adjustment is significantly influenced by positive Q4 results and optimistic forward-looking commentary from competitor Korn Ferry (NYSE:KFY), which reported stronger performance in May compared to April, signaling sequential improvement and resilience in the executive search market against concerns of cyclical headwinds or tariff-driven uncertainty. Heidrick & Struggles itself recently reported Q1 2025 revenue of $284 million, surpassing analyst expectations of $264.37 million, although its adjusted earnings per share (EPS) of $0.67 narrowly missed the $0.68 forecast. The company showcased a robust cash position, increasing to $325 million, and provided Q2 revenue guidance of $285 million to $305 million, targeting mid to high single-digit organic revenue growth, supported by its ongoing focus on digital tools and organic expansion across key sectors.

Key Decisions for Investors

• Given Truist's maintained Hold rating alongside the price target increase, investors should assess if HSII's current valuation appropriately reflects the positive sector signals from Korn Ferry against HSII's slightly mixed Q1 EPS.
• Monitor Heidrick & Struggles' ability to achieve its Q2 revenue guidance and translate top-line growth into improved earnings, particularly in context of its digital innovation and talent development initiatives.
• Consider the broader executive search market dynamics; sustained strength, as hinted by Korn Ferry's May performance, could provide a tailwind for HSII, but the unchanged underlying estimates from Truist suggest a need for continued scrutiny of fundamental performance.