Hewitt Associates Rebounds After Upgrade To 'Buy'

NEW YORK (AP) — Shares of Hewitt Associates Inc. rebounded Monday after an analyst upgraded the company, recovering from their sell-off last week when the human resources consultancy and services provider cut its revenue guidance for the year.

Shares of Lincolnshire, Ill.-based Hewitt Associates rose 4 percent, or $1.20, to $31.59 in midday trading. Last week after announcing fiscal second-quarter earnings and cutting its guidance, shares fell as low as $29.17.

Stifel Nicolaus analyst Shlomo Rosenbaum said Monday in a note to investors that the stock's current price made it a good deal for investors, and upgraded Hewitt to "Buy" from "Hold," saying Hewitt's core business strength "is not being fully appreciated by investors."

Losses from Hewitt's business process outsourcing unit are narrowing, Rosenbaum said, while the benefits business still has strong profit margins despite lower revenues.

However, some of Hewitt's important benefits clients are undergoing major changes, and their contracts with Hewitt may be at risk. These clients include Chrysler LLC, which recently filed for bankruptcy protection, and Sun Microsystems Inc., which is being acquired by Oracle Corp.