Jefferies lowers target prices on UK staffers following SThree's warning
Jefferies cut its target prices on Hays, Pagegroup and SThree on Tuesday, noting the latter's warning had highlighted further downside to earnings for UK staffers.
Jefferies lowered its price target on SThree from 420.0p to 300.0p after the group's unplanned trading update last week called out ongoing challenging market conditions, with increased political and macro-economic uncertainty in Europe driving further customer delaying decision-making which was now expected to negatively impact FY25 performance.
"With SThree more contract exposed vs UK peer the prolonged downgrade cycle seen across the market seems to be catching up with SThree," said Jefferies, which kept its 'hold' rating on the shares.
"We update our sector estimates and further moderate our recovery expectations. We downgrade SThree FY24-25e EPS by up to 63%, in line with updated guidance, with our lowered 300p target price reflecting both lower net fees and a lower 1x EV/net fee multiple."
While its maintained its 'buy' rating on Hays due to the shares trading close to its recession fair value level and offering high exposure to structural growth markets at trough valuation, it still dropped its target price on the stock from 115.0p to 100.0p.
As far as Pagegroup was concerned, Jefferies said it was "more vulnerable" to an economic slowdown given heavy permanent exposure and lowered its target price on the 'hold' rated stock from 440.0p to 400.0p.
Reporting by Iain Gilbert at Sharecast.com
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