Heidrick & Struggles Downgraded

September 24, 2009 – Shares of executive search firm Heidrick & Struggles International/(NASDAQ:HSII) fell sharply last week as an analyst downgraded its shares, saying they're overvalued. Analyst Ty Govatos of C.L. King and Associates downgraded the Chicago-based company to "neutral" from "buy." He said in a note to clients that he initially rated the shares a "buy" after Heidrick & Struggles' first-quarter $18.9 million loss led to a decline in its share price from more than $23 to less than $17. Heidrick & Struggles and fellow executive search firm Korn/Ferry International lagged the market, with Heidrick's total enterprise value selling at a discount to Korn/Ferry, Mr. Govatos said. The gap in share value between Heidrick & Struggles and Korn/Ferry has been eliminated, with Heidrick & Struggles closing at $26.31 Friday and Korn/Ferry ending the day at $14.95. "We still believe the longer-term outlook for Heidrick & Struggles and the search companies is good, but over the shorter term the price of Heidrick & Struggles seems to have run ahead of itself," Mr. Govatos added.

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