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NEW YORK — Shares of CRA International Inc. jumped Monday after a William Blair analyst boosted his rating on the management and financial consulting company, saying it's poised for big earnings growth as the economy recovers.
"This upgrade could be somewhat early," wrote analyst Timothy McHugh in a note to investors. He now rates CRA "Outperform" from "Market Perform."
Shares of CRA rose $2.52, or 10.3 percent, to $27.02 in midday trading. The company's stock is up 9 percent this year as of last week's close. It has changed hands between $44.95 and $16.77 in the past 12 months.
McHugh said that broader demand for business consulting services may be gradually getting better, while CRA's individual corporate consulting operations are improving thanks to some new contracts in the Middle East and its June acquisition of business strategy consultancy Marakon Associates.
Demand for business consulting has dropped precipitously as companies cut costs during the recession, slashing discretionary spending.
But demand for CRA's business strategy services is going to increase over the next several years as the economy recovers, while antitrust actions by the government will boost its regulatory practice, McHugh said. The company's cost cuts mean a rebound in revenue could generate "meaningful" growth in earnings.
He said the company has removed $31 million, or 10 percent, of expenses over the last two years.
While he sees CRA earnings at $1.50 per share this year, a "solid recovery" in sales could drive per-share profit up to $3.50 to $4 in a few years, he said.
However, he said there are no events in the near future that will help drive the Boston company's stock price higher.
CRA reported second-quarter earnings in June, posting a profit of $1.7 million, or 16 cents per share, compared with a loss of $512,000 or 5 cents per share, during the same time last year. Revenue fell 30 percent to $72 million.
