Our $11 target price is based on an EV/EBITDA multiple target range of 9-12x applied to our FY25 adjusted EBITDA estimate, representing a 25% discount to likewise peers in the HCM services space. We see this multple range as consistent given the stock's historical trading range, as well as the company's relatively higher leverage. Our target price is also supported by our DCF analysis, which suggests an equity value of $16 per share. We believe the stock should trade at a moderate discount to our calculated DCF value given the limited float. Our DCF assumptions include: (i) mid-single-digit revenue growth over 2026-29, moderating to the low single digits in the outer years, (ii) an ~8.0% WACC, and (iii) a discount rate of 8.75-9.00% and terminal growth rate of 1.0%.

The stock screens as High Risk on Citi’s quantitative model given the recent de-SPAC and limited trading history. 

Upside risks to achieving our target price include: Over time, we would expect the stock’s profile to mirror other names within the Business Services / Info Services category, particularly as the stock's free float rises.

Downside risks to achieving our target price include:
• Economic densitivity presents risk as periods of weak or strong economic growth affect employment / unemployment numbers, customer retention, new logo signings, pricing dynamics, and operating costs. 
• Alight has competitive risk given their wide end market. Competition includes payroll companies, HR and tax service providers, financial advisors, agents, brokers, HSA administrators, enterprise management, and data analytics companies. 
• Product risk as future financial performance and contract wins are dependent on a number of product-specific factors. Failure to develop meaningful HCM solutions could result in lower contracted revenue and lower future bookings.
• Technology risk as Alight’s business operates on complex technology that is built and maintained both in-house and outsourced. 
• Fiduciary responsibility & regulatory changes present risk given the nature of Alight’s business involving health and wealth services. 
• Weakened sentiment for de-SPACs, as well as significant PE overhang could present upside resistance and/or increased stock volatility.