A Fresh Look at Alight (ALIT) Valuation Following Digital Expansion and New AI Partnerships

Alight (ALIT) is stepping up its digital game as it announces an expanded partnership with IBM to bring advanced AI capabilities into its employee benefits offerings. This follows a new deal with MetLife to enhance retirement solutions, as well as the launch of an AI benefits assistant.

See our latest analysis for Alight.

Despite Alight’s recent flurry of AI partnerships and digital launches, the market has remained sharply skeptical, with a 1-year total shareholder return of -56.4% and the share price now down 57% year-to-date at $2.88. Short-term momentum is not improving, but if the company’s strategic bets on AI start to generate tangible results, sentiment could shift in unexpected ways.

If you’re curious about where technology and innovation are making the biggest impact, now is the perfect moment to broaden your investing universe and discover fast growing stocks with high insider ownership

Given this multi-year slump and a share price well below analyst targets, the real question is whether investors are looking at a genuine value play or if the market has already accounted for any future turnaround in Alight’s favor.

Most Popular Narrative: 60% Undervalued

Alight's most followed narrative values the company at $7.21 per share, which is more than double the recent closing price of $2.88. This dramatic gap is supported by bold expectations for future profitability, providing a striking context for the fair value estimate.

Adoption of AI-enabled automation and data analytics is improving operational efficiency and enhancing client experience, as demonstrated by reduced call volumes and margin expansion. These factors are expected to drive continued net margin improvement and higher profitability. Expanding partnerships, such as the new alliance with Goldman Sachs Asset Management, are anticipated to unlock new recurring revenue streams (for example, wealth management products) and broaden Alight's addressable market, contributing to future revenue growth.

Read the complete narrative.

Want to uncover what’s fuelling this optimistic outlook? The secret mix behind this ambitious price estimate involves projected surges in both profitability and recurring revenues. Dive in and see what aggressive financial leaps are assumed to close that value gap.

Result: Fair Value of $7.21 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, delayed deal closures and ongoing softness in non-recurring project revenue remain key risks that could quickly reshape analysts’ outlook for Alight.

Find out about the key risks to this Alight narrative.

Build Your Own Alight Narrative

If you see things differently, or want to dig into the numbers and draw your own conclusions, you can build your own in just a few minutes. Do it your way

A great starting point for your Alight research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Ready for Your Next Investing Move?

Smart investors don’t wait for the crowd. They hunt for game-changing opportunities early. Use these tailored picks to step ahead and energize your portfolio now.

• Capture high yields and regular passive income by analysing these 22 dividend stocks with yields > 3% offering strong returns and proven reliability.
• Find breakthrough healthcare innovation by exploring these 33 healthcare AI stocks harnessing artificial intelligence to improve outcomes and disrupt the medical landscape.
• Jump on digital transformation with these 81 cryptocurrency and blockchain stocks shaping financial markets and technology with real-world blockchain solutions and growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com