Analysts Weigh In on Alight as Price Targets Dip Amid Mixed Growth Outlook

Alight’s analyst price target has been reduced modestly from approximately $7.57 to $7.21 per share. This adjustment reflects analysts’ expectations for slower near-term revenue growth and a recalibrated outlook as the company focuses on margin improvements amid delayed deal closures.

Analyst Commentary

Recent updates from Street analysts offer a balanced perspective on Alight’s near-term prospects, focusing on both the company's execution and its market position.

Bullish Takeaways

Analysts note that Alight’s backlog continues to grow, which indicates that underlying demand for its services remains robust despite near-term revenue timing issues.
There is confidence in management’s ability to drive margin expansion as the company prioritizes operational efficiencies and cost controls.
Despite revised price targets, bullish analysts have maintained Buy ratings. This suggests continued belief in Alight’s long-term valuation upside.
Recent quarterly results exceeded internal forecasts for both revenue and adjusted EBITDA. This demonstrates resilience in the company’s core business execution.

Bearish Takeaways

Bearish analysts cite delayed deal closings, which have led to lower near-term growth projections and prompted downward revisions to revenue guidance for 2025.
There are concerns regarding continued softness in non-recurring project revenue, which further impacts growth acceleration expectations.
Lowered valuation multiples reflect a more cautious stance as investors await evidence of improved execution and consistent quarterly performance.
2025 is viewed as a transition year, with the need for Alight to reset expectations and rebuild its track record of delivering solid results.

What's in the News

Alight announced the addition of Sword Health, an AI-driven clinical care platform, to its Partner Network. This expands offerings in musculoskeletal, pelvic, and behavioral health solutions through advanced technology and outcome-based pricing (Key Developments).
The company released the second major update of Alight Worklife for 2025. This update introduces over 30 new features and enhancements across health, wealth, wellbeing, and absence management, including improved AI integrations and digital wallet support (Key Developments).
Alight reported a goodwill impairment charge of $983 million for the second quarter ended June 30, 2025 (Key Developments).
New financial guidance for 2025 sets expected revenue between $2,282 million and $2,329 million (Key Developments).
Alight completed the repurchase of more than 36 million shares since August 2022, representing nearly 7% of shares outstanding as of June 30, 2025 (Key Developments).

Valuation Changes

The consensus analyst price target has decreased modestly from $7.57 to $7.21 per share.
The discount rate has risen slightly from 9.35% to 9.39%.
Revenue growth expectations have fallen from 2.90% to 2.00%.
The net profit margin forecast has increased from 7.91% to 8.12%.
The future P/E (Price/Earnings) ratio has declined from 25.75x to 24.56x.

AI-driven automation, expanded partnerships, and a shift to cloud-based recurring revenue are driving higher profitability, revenue stability, and market expansion.
Increased demand for integrated HR solutions, improved commercial execution, and a robust sales pipeline support long-term growth and greater earnings visibility.
Slowed new business, weak project demand, and flat client growth, coupled with dependence on large clients and uncertain returns on investments, threaten revenue stability and margin expansion.

Catalysts

About Alight

A technology-enabled services company worldwide.What are the underlying business or industry changes driving this perspective?

Adoption of AI-enabled automation and data analytics is improving operational efficiency and enhancing client experience, demonstrated by reduced call volumes and margin expansion, which should drive continued net margin improvement and higher profitability.
Expanding partnerships-such as the new alliance with Goldman Sachs Asset Management-are expected to unlock new recurring revenue streams (e.g., wealth management products) and broaden Alight's addressable market, contributing to future revenue growth.
Ongoing shift to high-margin, cloud-based, recurring revenue models (over 93% of revenue is now recurring), along with increased wallet share from service expansions in large client renewals, is likely to support revenue stability and further margin expansion over time.
Rising complexity in workforce regulations and growing employer focus on employee well-being and financial wellness is increasing demand for integrated, scalable HR solutions like Alight's, supporting long-term revenue growth potential.
A strong pipeline (with late-stage opportunities up 35% year-over-year), combined with strengthened commercial execution and new domain talent, positions Alight to accelerate bookings growth and improve earnings visibility as deal closure rates rebound.

Alight Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Alight's revenue will grow by 3.0% annually over the next 3 years.
Analysts assume that profit margins will increase from -47.8% today to 5.6% in 3 years time.
Analysts expect earnings to reach $142.2 million (and earnings per share of $0.17) by about September 2028, up from $-1.1 billion today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 38.6x on those 2028 earnings, up from -1.9x today. This future PE is greater than the current PE for the US Professional Services industry at 26.1x.
Analysts expect the number of shares outstanding to decline by 0.68% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.88%, as per the Simply Wall St company report.

Alight Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Prolonged and increasingly complex sales cycles, combined with execution challenges in commercial operations, have delayed new client signings and upsell opportunities, which may lead to persistent revenue timing headwinds and slower top-line growth if not fully resolved.
Project revenues have declined by 20% year-over-year and show no signs of near-term recovery, as clients delay or reassess nonrecurring initiatives, limiting opportunities for incremental revenue and pressuring overall growth targets.
Flat participant counts and volumes, despite previous expectations of moderate growth, indicate possible saturation in core markets or limited expansion of employer clients, constraining revenue and long-term scalability.
Alight's reliance on expanding wallet share with existing large enterprise clients and Fortune 500 companies increases vulnerability to client concentration risk, which could negatively impact future revenue stability and margin predictability if retention or expansion slows.
Continued investments in transformation initiatives, domain expertise hiring, technology (AI, automation), and strategic partnerships may not yield anticipated cost synergies or higher margins, posing a risk to net margin expansion and future earnings if additional profitability is not realized.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $8.214 for Alight based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $11.0, and the most bearish reporting a price target of just $6.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.5 billion, earnings will come to $142.2 million, and it would be trading on a PE ratio of 38.6x, assuming you use a discount rate of 8.9%.
Given the current share price of $3.92, the analyst price target of $8.21 is 52.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Weigh In on Alight as Price Targets Dip Amid Mixed Growth Outlook