Houlihan Lokey is a global investment banking company, advising clients on M&A, capital markets and restructurings. It may be much smaller and far less-known to the general public than the likes of J.P. Morgan or Goldman Sachs, but it regularly outranks them when it comes to M&A, restructurings and fairness of opinion.
Advisory is a very sweet business to be in. Houlihan Lokey basically gets paid to give its opinion. The company’s biggest expense is compensation with little-to-no capital expenditures, leaving tons of free cash flow at the shareholders’ disposal. This is of little consolation when business confidence plunges because of a war breaking out, for example. At least that’s how the company itself explains its most recent quarter’s 15% revenue decline. Apparently, the global disruption caused by the US-Iran war is not good for business. Who would’ve thought?
Geopolitics aside, including today’s pre-market drop, the stock is down 38% from its all-time high of $212 reached in September, 2025. The question is, should investors abandon ship or take advantage and buy a high-quality business at a good price? The Elliott Wave chart below suggests that it is too late for the former, but also too early for the latter.
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It allows us to put the recent decline into big picture context. And it turns out that it was preceded by a textbook five-wave impulse pattern to the upside, marked (1)-(2)-(3)-(4)-(5), where the impulsive structure of wave (1) is also visible. According to the theory, a three-wave correction follows every impulse before the larger trend can resume.
Unfortunately for the bulls, the drawdown from $212 looks like a single wave, not three. Furthermore, it can easily be labeled as a five-wave impulse, as well, meaning that it’s probably just wave (a) of a bigger zigzag retracement. If this count is correct, waves (b) up and (c) down have yet to take place, before the bulls can finally return in wave III. Houlihan Lokey stock can test the support area near $100 per share more than once in the next couple of years.
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