Houlihan Lokey walks into its Thursday earnings call with options traders positioned about as bullishly as they've been all year — a sharp contrast to the cautious tone set by a bruising week for the advisory sector.
The clearest signal right now is in options. The put/call ratio collapsed to 0.09 on Tuesday, the lowest reading of the past 52 weeks against a 20-day average of 0.16. That's a nearly one standard-deviation tilt toward calls, meaning options traders are leaning heavily on upside into the quarterly print. The move is all the more striking because it reverses a multi-week stretch of defensive hedging — the PCR held in the 0.24–0.27 range through most of April — suggesting a sharp recalibration as the event date approached.
The short book backs up that constructive read. Short interest is modest at roughly 2.4% of the free float, and it has been drifting lower over the past week, down about 1.6% week-on-week after touching a local peak near 2.55% in mid-April. Borrowing costs, while they jumped sharply on Tuesday to 0.66% from 0.38% the prior session, remain trivially cheap relative to any real squeeze dynamic. Availability is extremely loose — well above 8,000% of short interest — meaning the lending market is nowhere close to stressed. This is not a stock where short positioning is telling a meaningful story.
The Street is broadly bullish, though targets have been creeping lower. Morgan Stanley maintained its Overweight rating while trimming its target from $205 to $193 in early April; Goldman Sachs held its Buy but cut from $210 to $184 over the same period. Both actions were in response to the same macro headwind — a tighter M&A environment amid tariff uncertainty — rather than any company-specific deterioration. The consensus mean target of $174.50 implies roughly 16% upside from current levels at $150.17, and ratings remain positively skewed. The stock trades at 16.9x earnings and 3.8x book, with the P/E expanding about 1.3 turns over the past 30 days. Factor scores are undramatic: the dividend score ranks in the 99th percentile, reflecting the firm's historically generous payout history, while EPS momentum over 90 days registers at the 74th percentile — solid but not stretched.
Earnings history adds a note of caution to the otherwise bullish setup. The last two prints each produced sharp same-day declines — the January 2026 event triggered a 6.0% drop and a 6.7% five-day slide, and the comparable prior quarter saw losses of 6.8% on day one and 7.0% over five days. The pattern is consistent: HLI's earnings moves have skewed negative even when the business narrative has been constructive. That history sits awkwardly against the current PCR reading, where call demand has surged without an obvious catalyst.
Peers had a mixed week. EVR fell 4.2% over the five sessions, while MC and PIPR dropped 8.9% and 8.5% respectively. PJT was nearly flat, down less than 1%. HLI's own 5.9% weekly loss sits in the middle of the group, suggesting sector-wide pressure from the same M&A pipeline concerns weighing on analyst targets. The key thing to watch Thursday is whether management's commentary on deal flow and pipeline conversion aligns with the call-heavy options positioning — or whether the recent history of post-earnings declines reasserts itself.
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