Canaccord has revised its rating for ASGN Incorporated (ASGN, Financial), moving it from a Buy to a Hold. The firm also significantly lowered its price target for the company to $55, a sharp decline from the previous target of $115.
The downgrade comes as ASGN's Assignment revenue continues to struggle, even after several years of facing macroeconomic challenges. Canaccord analysts express caution, noting that despite a somewhat stabilized macro environment, the persistent drop in Assignment revenue may indicate shifting business dynamics.
Additionally, Canaccord highlights potential risks related to the Department of Government Efficiency, which could impact ASGN's future performance. Investors are advised to consider these factors as they assess ASGN's position in the market.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 6 analysts, the average target price for ASGN Inc (ASGN, Financial) is $71.83 with a high estimate of $115.00 and a low estimate of $53.00. The average target implies an upside of 38.78% from the current price of $51.76. More detailed estimate data can be found on the ASGN Inc (ASGN) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, ASGN Inc's (ASGN, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for ASGN Inc (ASGN, Financial) in one year is $93.09, suggesting a upside of 79.85% from the current price of $51.76. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the ASGN Inc (ASGN) Summary page.
ASGN Key Business Developments
Release Date: April 23, 2025
- Revenue: $968.3 million, a decrease of 7.7% year over year.
- Adjusted EBITDA Margin: 9.7%.
- Commercial Segment Revenue: $672.2 million, a decrease of 8.1% year over year.
- Federal Government Segment Revenue: $296.1 million, a decrease of 6.7% year over year.
- Gross Margin: 28.4%, an increase of 20 basis points from the previous year.
- Commercial Segment Gross Margin: 32.4%, up 40 basis points year over year.
- Federal Government Segment Gross Margin: 19.5%, a decline of 20 basis points year over year.
- Net Income: $20.9 million.
- Adjusted EBITDA: $93.6 million.
- Free Cash Flow: $6.6 million.
- Cash and Cash Equivalents: $107 million at quarter end.
- Net Leverage Ratio: 2.6 times at the end of the first quarter.
- Q2 2025 Revenue Guidance: $985 million to $1.015 billion.
- Q2 2025 Net Income Guidance: $29.3 million to $34.3 million.
- Q2 2025 Adjusted EBITDA Guidance: $101 million to $108 million.
- Q2 2025 Adjusted EBITDA Margin Guidance: 10.3% to 10.6%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ASGN Inc (ASGN, Financial) reported revenues of $968.3 million and an adjusted EBITDA margin of 9.7%, in line with guidance expectations.
- IT consulting revenues grew to 61% of total revenues, up from 57% in the prior year period.
- The acquisition of TopBloc is tracking ahead of bookings, revenue, and adjusted EBITDA expectations.
- Strong bookings in both commercial and government segments, with a book-to-bill ratio of 1.2 times for the quarter.
- ASGN Inc (ASGN) continues to deliver high-value IT services, focusing on AI, data solutions, cybersecurity, and cloud engineering.
Negative Points
- Revenues decreased by 7.7% year over year, with the Commercial segment down by 8.1%.
- Federal Government segment revenues declined by 6.7% year over year due to program endings and DOGE impacts.
- Assignment revenue decreased by 16% year over year, reflecting softness in certain commercial segments.
- SG&A expenses increased slightly, including acquisition and integration costs, and a one-time write-off related to software enhancements.
- Macroeconomic factors such as higher inflation and uncertainty regarding tariffs have led to cautious IT spending by clients.
