Truist raises Korn/Ferry price target on strong results, tariff resilience

Truist Securities raised its price target on Korn/Ferry (KFY) to $88 from $80, maintaining a Buy rating, after the company's Q4 fiscal 2024 results exceeded expectations, driving a 6% share price increase. Korn/Ferry reported adjusted EPS of $1.32 on revenue of $712 million, surpassing forecasts of $1.26 and $690.07 million, respectively, with adjusted EBITDA up 8%. The firm's Q1 fiscal 2026 guidance is in-line to slightly above consensus, and Truist highlighted a revenue growth guidance difference compared to peer Heidrick & Struggles, suggesting potential conservatism.

Analysis

Truist Securities has increased its price target for Korn/Ferry (KFY) to $88.00 from $80.00, reaffirming a Buy rating, following the human capital firm's strong fourth-quarter fiscal 2024 results which surpassed market expectations. Korn/Ferry, with a market capitalization of $3.45 billion and a P/E ratio of 15.2, reported an adjusted EPS of $1.32 (versus $1.26 forecast) on revenues of $712 million (versus $690.07 million forecast); this performance included an 8% growth in adjusted EBITDA and a 70 basis point margin expansion, indicating improved operational efficiency. The company's shares rose 6% on this news while the broader S&P index remained flat. For the first quarter of fiscal 2026, Korn/Ferry guided for fee revenue between $675 million and $695 million and an adjusted EBITDA margin of 16.8% to 17.2%, which is in-line to slightly above consensus forecasts. Truist noted potential conservatism in this guidance, highlighting an approximate 8-percentage-point difference in sequential revenue growth guidance relative to peer Heidrick & Struggles (HSII), and named KFY its preferred investment in the sector. This positive outlook emerged despite prior investor concerns about tariff-driven uncertainty, which Truist believes were priced in, leading to low expectations. KFY also returned $173 million to shareholders through buybacks and dividends, currently offering a 2.88% dividend yield, and its strategic focus on technology, AI, and organizational performance solutions is anticipated to fuel future growth, a sentiment shared by other firms like William Blair and Goldman Sachs who noted KFY's robust performance in a challenging economic environment.

Key Decisions for Investors

• Consider KFY favorably given its strong Q4 FY24 earnings, positive Q1 FY26 guidance, and the increased price target from Truist, aligning with the maintained Buy rating and the stock's recent upward momentum.
• Evaluate the potential for an upside surprise if Korn/Ferry's Q1 FY26 performance exceeds its potentially conservative guidance, as suggested by the revenue growth differential with peers.
• Monitor KFY's execution on its strategic technology and AI initiatives as key future growth drivers, while also factoring in the company's commitment to shareholder returns via its 2.88% dividend yield and active buyback program.
• While analyst sentiment is predominantly bullish, the InvestingPro insight that KFY was not at the top of its AI-driven list of undervalued stocks suggests investors should conduct thorough valuation comparisons within the human capital sector.