Global consulting firm Korn Ferry (NYSE:KFY) has outperformed expectations, delivering top-and-bottom-line beats for the most recent quarter despite challenges in its Executive Search segment. The stock is up 38% over the past year, with further upside potential in sight. There are encouraging yields seen in other sectors, such as Consulting and Digital, coupled with solid cost control and consultant productivity strategies.
This points toward robust financial health and further stimulus from projected Federal Reserve interest rate cuts, which add potential rocket fuel to this promising picture. All the abovementioned suggests an attractive opportunity for investors, particularly if the company successfully navigates and strengthens its Executive Search domain.
Korn Ferry’s Services & Segments
Korn Ferry and its subsidiaries are global providers of organizational consulting services. It serves diverse clients, including public and private companies, mid-market and emerging growth companies, and government and non-profit organizations.
The company operates its services through four distinctive segments: Consulting, Digital, Executive Search, and Recruitment Process Outsourcing (RPO) & Professional Search. The Executive Search segment, which focuses on recruiting board-level to general management positions, has been facing challenges amid a talent shortage, especially regarding AI expertise in a fast-evolving industry. It generated revenue of $200.8 million, a decrease from $214.6 million in the same period of 2023.
Korn Ferry’s Recent Financial Results
The company recently published its Q4 and 2024 full fiscal year results. Its reported fourth-quarter revenue of $699.92 million beat analyst estimates of $689.92 million, though it marked a 5% year-over-year decrease. The net income was $65.2 million for the quarter, and earnings per share (EPS) came in at $1.26, surpassing consensus expectations of $1.12.
The revenue was $2,762.7 million for the entire year, a 3% decline from the previous year. However, marquee and regional accounts, representing $1 billion or 37% of total fee revenue, saw growth of 3%. Furthermore, the Consulting and Digital segments achieved record-breaking fee revenue, increasing the consulting average bill rate by 11%.
Looking ahead, Korn Ferry expects its Q1 FY’25 fee revenue to fall between $655 million and $675 million. Diluted earnings per share are anticipated to range from $1.05 to $1.15.
What Is the Price Target for KFY Stock?
Analysts following the company have been constructive on the stock. For example, Truist analyst Tobey Sommer, a five-star analyst according to Tipranks ratings, raised the price target on the shares from $74 to $78 while maintaining a Buy rating after its Q4 earnings beat. He noted that Korn Ferry is among the most cyclical names under coverage and should be an early beneficiary when recruiting demand ultimately rebounds higher.
Overall, Korn Ferry is rated a Strong Buy based on four analysts’ recommendations and recently assigned price targets. The average price target for KFY stock is $77.00, representing a potential upside of 14.69% from current levels.
The stock has been trending upward, climbing 14% year-to-date. It trades at the higher end of its 52-week price range of $43.98 – $70.78 and shows ongoing positive price momentum, trading above its 20-day (66.23) and 50-day (65.01) moving averages.
Korn Ferry in Summary
Korn Ferry’s recent financial performance has displayed solid growth despite minor setbacks in the Executive Search segment. Efficient cost management and consultant productivity strategies, combined with incentives like potential interest rate cuts by the Federal Reserve, point to possible future upside. Given these factors, alongside positive stock momentum, KFY presents a compelling option for investors in the sector.
