Canaccord Genuity analyst Joseph Vafi has maintained their bullish stance on ALIT stock, giving a Buy rating today.
Joseph Vafi has given his Buy rating due to a combination of factors related to Alight’s financial performance and strategic moves. The company’s focus on recurring revenue streams, particularly from its Business Process as a Service (BPaaS) offerings, is a key driver. The growth in BPaaS is underscored by the solid performance of the flagship Worklife platform, with a 21% revenue increase in this segment. This growth trajectory is bolstered by significant deals, such as the ongoing GE deal and another major Fortune 10 deal, which are expected to contribute to future revenues, particularly from 2025 onwards.
The planned divestiture of Alight’s professional services and payroll units to H.I.G Capital for up to $1.2 billion is another strategic decision that supports the Buy rating. This move is anticipated to enhance the company’s financial health by increasing gross and adjusted EBITDA margins, boosting the proportion of recurring revenue, and accelerating deleveraging efforts. Vafi expects these changes to lead to a more favorable valuation of Alight over time, with reduced debt, enhanced margins, a higher percentage of recurring revenue, and an increased focus on as-a-service revenue streams, which are projected to continue growing at a healthy rate.
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Alight (ALIT) Company Description:
Foley Trasimene Acquisition Corp is a blank check company.
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