UBS Reiterates Neutral Rating on Exponent, Sees Potential for Growth in 2025

UBS analysts reiterated their Neutral rating and maintained a price target of $88 on Exponent (NASDAQ:EXPO), following investor meetings with Exponent's CEO Catherine Corrigan and CFO Rich Schlenker.

The discussions revealed a stable demand environment, particularly in Consumer Electronics, which has shown modest sequential gains. The Reactive segment remains healthy, although slightly below the Q1 surge. Management indicated that sequential headcount growth might resume in the second half of the year, with year-over-year headcount growth anticipated in 2025. This could help Exponent return to its historical revenue growth algorithm in the high single-digit to low double-digit percentage range.

If achieved, this growth could surpass UBS's current estimate of a 5% increase. Despite being surprised by the stock's performance during Q1 earnings and its subsequent resilience, the analysts noted that management's optimistic outlook and the potential for stronger growth in 2025 could present a positive narrative for Exponent.