Highlighted in this post are the following companies: Corporate Executive Board (EXBD), CRA International (CRAI), First Advantage Corporation (FADV) and Navigant Consulting (NCI).

Shares of Sell-rated Corporate Executive Board (EXBD) are trading down 20% after releasing 4th-quarter results that fell short of Street expectations, and issuing a disappointing 2009 forecast. These results could be an ominous sign for other firms in the business consulting industry.

The Corporate Executive Board continues to experience deterioration in its cross-sell ratio. Other key operating metrics, including contract value, average subscription price, total member subscriptions and client renewal rate all fell in the 4th quarter of 2008.

The company's management expects to generate 2009 earnings between $1.30 and $1.60 per share -- well short of the current Street consensus estimate of $2.13 per share.

We continue to have a negative outlook for the business consulting services industry, based upon the difficult economic environment facing the companies' existing and potential customers.

There are several ways in which we expect the current recession to negatively impact the business consulting industry. First, existing clients may either delay decisions on whether or not to retain a consultant firm until economic visibility improves, or add fewer services than they would in periods of economic growth. Second, existing clients that delay services may find that they can get by without the support provided by consulting firms. Third, customer growth could slow significantly, as potential new customers would be significantly less likely to add consulting services when budgets are tight.

In the current economic environment, we anticipate that some combination of all three scenarios highlighted above will impact the business consulting industry in various degrees.

The poor results posted by EXBD may foreshadow challenging times ahead for other Sell-rated business consulting firms in our coverage universe, including CRA International (CRAI), First Advantage Corporation (FADV) and Navigant Consulting (NCI).