If FTI Consulting suffers from a lack of name recognition, its clients don’t.
The firm, staffed with former FBI, MI-6 and Mossad agents, has advised everyone from Jeff Bezos in the alleged Saudi phone hack case that United Nations experts got involved with last month, to George W Bush and OJ Simpson’s defense team — not to mention helping recover billions stolen by Bernie Madoff.
It’s paid off for investors, at least recently. After going nowhere since the 2008 recession, FTI’s market value has almost tripled, rising 191% to $4.7 billion, after beating Wall Street projections in the last two years. The Washington, DC-based company is expecting 2019 results, to be released on February 25, to show a second straight year in which profit increased by more than 40%. The question now is how long FTI’s recent growth will last. In years past, it relied in part on numerous mergers and acquisitions. FTI’s restructuring business also did well during the recession, working on the bankruptcies of Lehman Brothers, General Motors and the CIT Group.
Under chief executive officer Steven Gunby, who started in 2014, FTI has focused more on organic growth, expanding into areas such as cybersecurity and lobbying. But wary investors now want to see another couple of years of growth, said Tobey Sommer, a longtime FTI analyst for SunTrust Robinson Humphrey. “There’s a lot of skepticism” among investors that FTI can keep growing organically, he said. The shares fell 2.6% on Thursday, the most since November, closing at $125.89.
Even so, the stock should climb to $155 in a year, he projects, or a 20% increase from Wednesday’s closing price. The bullishness was echoed by Joe Kunkle, head of research at Relativity Capital Advisors, which has owned FTI shares. He said the stock’s valuation remains fairly cheap and Wall Street profit expectations are too pessimistic. FTI shares trade at about 22 times earnings, roughly the same as the S&P 500 Index.
Leave a Reply