We are downgrading our recommendation on FTI Consulting (FCN) to Underperform from Neutral as a dramatic deceleration is expected in Corporate Finance and Restructuring through the remainder of 2010.
The company’s fourth quarter earnings came in only a couple of pennies short of the Zacks Consensus Estimate due to disciplined expense management and fewer share count. However, any significant growth was restricted by declining revenues from Technology and Strategic Communication segments.
Further, the near-term outlook on these segments remains cautious due to the ongoing market turmoil, which is also expected to adversely affect the company’s primary segment, Corporate Finance and Restructuring. We believe there is no significant growth driver to pull operating leverage in the near term.Zacks Investment Research