Is Alight (ALIT) Stock a Buy After a String of Earnings Misses and Leadership Changes?

The stock of Alight (ALIT) has been a rollercoaster ride for investors in 2025, marked by a sharp revenue decline, a massive non-cash goodwill impairment charge, and a leadership shakeup. Yet, amid the turbulence, the stock trades at a significant discount to its historical averages and faces a growing chorus of analysts who see upside potential. For contrarian investors, the question is whether this volatility reflects a mispricing of value or a deeper structural challenge.

A Tale of Two Contradictions

Alight's third-quarter 2025 results revealed a revenue drop of 4.0% year-over-year to $533 million, driven by lower project revenue and the 2024 divestiture of its Payroll and Professional Services business. This decline, coupled with a $1,338 million goodwill impairment charge, led to a net loss of $1,055 million-a stark contrast to the $44 million net loss in the prior-year period. Yet, the company's gross profit margin improved to 33.4% from 31.4%, and it secured high-profile client wins with MetLife and Cintas. These mixed signals highlight a company in transition: struggling with short-term headwinds but showing resilience in core operations.

The leadership changes have added to the uncertainty. The departure of CFO Jeremy Heaton, replaced by interim CFO Greg Giometti, triggered a 7.1% drop in the stock price. Such transitions often raise questions about operational continuity, particularly in a sector where client retention and cost discipline are critical. However, Alight's decision to maintain its $0.04 per share dividend-despite the impairment-suggests confidence in its recurring revenue model, which now accounts for 91.7% of total revenue.

Analyst Optimism and Contrarian Signals

Despite the near-term pain, analysts remain cautiously optimistic. The average price target for ALIT stands at $5.25, implying a potential 149% to 196% upside from its current price. Four of five analysts have issued "Strong Buy" ratings, citing disciplined expense management and a projected recovery in core business performance by late 2025. This optimism is not without merit: Alight's adjusted EBITDA rose to $138 million in Q3 2025, and its business outlook for the year remains intact, with revenue guidance of $2.25 billion to $2.28 billion.

From a technical perspective, the stock's volatility has pushed it below both its 50-day and 200-day moving averages, with the relative strength index (RSI) nearing oversold territory. Historically, such conditions have often preceded rebounds, particularly for companies with strong balance sheets or recurring revenue streams. Alight's cash flow from operations, though not disclosed in recent reports, has historically supported its dividend and debt obligations, suggesting a buffer against further deterioration.

Risks and Realities

Critics will point to the company's declining project revenue and downward guidance as red flags. The Q3 report noted "reduced commercial activity" and a $4 million finalization of a commercial agreement related to the 2024 divestiture. These factors underscore the fragility of Alight's growth model, which relies heavily on large client contracts. Additionally, the goodwill impairment-a non-cash but symbolic hit-raises questions about the sustainability of its asset base.

Yet, for contrarians, these risks may already be priced in. The stock's 52-week range of $1.75 to $7.66 reflects a market that has swung between panic and hope. A contrarian investor might argue that the current price of around $3.50 (as of December 2025) offers a margin of safety, particularly if the company can stabilize its project revenue and demonstrate progress in cost optimization.

Conclusion: A Calculated Bet

Alight's story is one of transformation. The recent earnings misses and leadership changes have rattled investors, but they have also created a valuation that appears disconnected from the company's underlying strengths. For those willing to look beyond the noise, the combination of analyst optimism, technical indicators, and a resilient core business suggests a potential contrarian opportunity. However, success will depend on Alight's ability to execute its turnaround plan-a task that remains unproven. As always, patience and a clear-eyed assessment of risks are essential.