February 28, 2008 / 9:57 PM / 11 years ago

UPDATE 2-FTI Consulting Q4 profit beats Wall Street view

(Adds analysts’ comments, competitor’s results)

By Sweta Singh

BANGALORE, Feb 28 (Reuters) - FTI Consulting Inc (FCN.N) reported a 77 percent increase in quarterly profit, which also beat market expectations, and forecast a strong 2008 as the business advisory firm continues to benefit from the credit market turmoil.

Firms like FTI and Huron Consulting Group Inc (HURN.O) are expected to gain from a crisis in the financial markets as a rise in the number of bankruptcies and litigations would lead to an increase in restructuring and financial advisory businesses.

Credit related engagements are driving demand in all the segments of FTI, JMP Securities analyst Kevane Wong said.

The results and outlook are not surprising, they are just a “good confirmation,” Wong added. He has an “outperform” rating and a price target of $66 on the company’s shares.

The Baltimore-based company posted a fourth-quarter net income of $30.8 million, or 60 cents a share, compared with $17.4 million, or 42 cents a share, in the year-ago period.

Revenue increased about 29 percent to $280.5 million.

Analysts expected earnings of 58 cents a share, before special items, on revenue of $261.5 million, according to Reuters Estimates.

GAINS FROM CREDIT WOES

Analysts believe consulting firms will benefit more from the deteriorating credit market in 2008 than they did in 2007.

JMP’s Wong said that with a large restructuring segment, FTI will gather gains from the credit market turmoil sooner than competitors like Huron.

FTI, which derives 83 percent of its business from the United States, reported a 27 percent growth in revenue from its corporate finance/restructuring consulting segment to $73.6 million in the fourth quarter.

For 2008, the company expects earnings of $2.40 to $2.50 a share on revenue of $1,275 million to $1,315 million.

Analysts see 2008 earnings of $2.34 a share, before special items, on revenue of $1,153.1 million.

On Feb. 20, FTI’s competitor Huron reported a 44 percent increase in quarterly profit, but forecast first-quarter revenue below market expectations, citing weak performance of its legal financial consulting business.

Shares of FTI rose 6 percent to $59.25 in trading after the bell, after closing at $55.88 on the New York Stock Exchange. The stock has gained nearly 65 percent of its value in the last 12 months. (Editing by Himani Sarkar)

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