What Happened?
Shares of scientific consulting firm Exponent (NASDAQ: EXPO) jumped 2.3% in the morning session after JPMorgan initiated coverage on the company with an 'Overweight' rating and a $100 price target.
The investment bank viewed Exponent as a leader in science and engineering consulting, positioning the company for a strong rebound. JPMorgan's price target represented approximately 35% upside potential from the stock's price at the time of the announcement. The bank also projected that Exponent's revenue growth would accelerate to 9.5% in 2026, with margin expansion expected as challenges eased and business utilization improved.
After the initial pop the shares cooled down to $75.75, up 2% from previous close.
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What Is The Market Telling Us
Exponent’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 4% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy.
The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
Exponent is up 8% since the beginning of the year, but at $75.75 per share, it is still trading 19.1% below its 52-week high of $93.67 from January 2025. Investors who bought $1,000 worth of Exponent’s shares 5 years ago would now be looking at an investment worth $846.94.
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