On Thursday, an analyst at Needham increased the price target for Alight Solutions (NYSE:ALIT) to $13 from the previous $12, while reaffirming a Buy rating on the company's stock.
The adjustment follows Alight Solutions' announcement on Wednesday that it has entered into an agreement to divest its professional services and HCM/payroll outsourcing businesses. The deal, valued at $1 billion in cash along with $200 million in seller notes contingent on the financial performance of 2025, is with HIG Capital.
Alight Solutions expects the transaction to be finalized by the middle of fiscal year 2024. The company has outlined plans to utilize the proceeds from the sale to decrease its debt, invest in further growth, and potentially distribute capital back to its shareholders.
According to the analyst's assessment, the sale is anticipated to have a positive impact by lowering the company's financial leverage, enhancing profit margins, and streamlining its business narrative.
These improvements are projected to support a revaluation of Alight Solutions' stock. The analyst from Needham highlighted the potential benefits of the transaction, expressing confidence that these strategic moves could lead to a higher stock valuation for Alight Solutions.
The professional services and HCM/payroll outsourcing sectors are integral parts of Alight Solutions' operations, and their sale represents a significant reshaping of the company's business structure. With the expectation of the deal closing within the next fiscal year, Alight Solutions is poised to embark on a strategic redirection aimed at strengthening its financial position and focusing on core growth areas.
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