DA Davidson has adjusted its valuation outlook for Alight Solutions (NYSE: ALIT), lowering its price target to $5.00 from $6.00 yet maintaining a Buy rating on the shares. The firm said the downgrade follows what it characterized as "modestly disappointing results in 2025," and on that basis trimmed its forecasts for the company.
Shares of Alight were trading at $1.54, close to a 52-week low of $1.46 and well below the 52-week high of $7.66. Independent InvestingPro analysis referenced in market coverage indicates that Alight appears undervalued on a Fair Value basis.
DA Davidson flagged expectations that the newly installed senior management team will likely take a conservative stance when they provide guidance for 2026. The company is scheduled to report fourth-quarter results on February 19, prior to market open, when that guidance is expected to be disclosed.
Despite current headwinds, consensus analyst estimates cited show Alight is still forecast to return to profitability, with an EPS projection of $0.56 for fiscal 2025.
As part of its updated recommendations, DA Davidson urged the company to suspend its dividend program immediately and redirect free cash flow toward share repurchases and reducing outstanding debt.
In parallel with the price-target adjustment, the research firm reiterated that it holds a Buy rating on the stock, signaling continued confidence in the company’s longer-term prospects even after tightening near-term forecasts. Separately in coverage, DA Davidson has also been recorded as reiterating a Buy rating and a $6.00 price target on the stock in the context of other corporate developments.
Alight has reported a series of senior leadership moves that coincide with the analyst reassessment. The company confirmed the departure of Chief Executive Officer Dave Guilmette, effective December 31, 2025, under a separation agreement that allows for the possibility of engaging him as a consultant for up to three months after his exit to assist with the 2026 business plan.
On the finance side, Greg Giometti will step in as Interim Chief Financial Officer effective January 9, 2026, replacing Jeremy Heaton, who is leaving for an opportunity outside the benefits administration industry. The company also entered a consulting agreement with former Chief Strategy Officer Dinesh Tulsiani for an initial three-month advisory term.
Investor dynamics have shifted as well. Investment firm Starboard Value has fully exited its position in Alight, after previously holding 45.9 million shares, representing roughly 8.7% of Alight’s outstanding shares. DA Davidson's commentary and the company’s recent operational and governance moves reflect ongoing strategic adjustments at Alight.
What to watch next
Market participants will be focused on Alight’s fourth-quarter report on February 19 and the guidance from the incoming leadership team, which DA Davidson expects to be conservative. The firm’s recommendation to pivot cash returns away from dividends toward buybacks and debt reduction highlights priorities management and the board may need to address.