What Happened?
Shares of investment banking firm Houlihan Lokey (NYSE: HLI) jumped 4.1% in the afternoon session after Citizens upgraded the stock to Outperform from Market Perform with a $175 target price. According to TipRanks, Citizens said the shares trade well below their historical valuation and that the outlook is strengthening in financial restructuring and in financial and valuation advisory. The firm said backlog and new business hit records in the second quarter, activity has improved each month since the spring disruption, and pitch activity is running ahead of last year. The upgrade comes ahead of the third-quarter earnings report.
After the initial pop, the shares cooled down to $130.07, up 3.6% from the previous close.
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What Is The Market Telling Us
Houlihan Lokey’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 3.4% on the news that investors kept pricing in higher borrowing costs from the Federal Reserve’s recent rate hike and the lasting pressure that tighter policy puts on private-market dealmaking and exits. According to Morningstar, elevated policy rates create headwinds for private equity firms by lifting floating-rate interest expense and worsening exit bottlenecks. More expensive leverage can slow deal activity and make portfolio-company sales harder to complete at attractive prices, reducing distributions back to limited partners. That hangover from the Fed’s tightening move continues to weigh on publicly traded PE managers and related capital-markets names as the market reassesses how durable higher funding costs will be for leveraged deal flow.
Houlihan Lokey is down 26.2% since the beginning of the year, and at $130.07 per share, it is trading 35.7% below its 52-week high of $202.25 from October 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Houlihan Lokey’s shares 5 years ago would now be looking at an investment worth $1,326.
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