On Friday, RBC Capital Markets adjusted its price target for Hays Plc (LON:HAYS) (HAS:LN) (OTC: HAYPF), a leading global professional recruiting group, reducing it to GBP1.30 from GBP1.35. Despite the price target cut, the firm maintained an Outperform rating on the stock.
The revision follows Hays' recent Q3 trading update earlier this week, which revealed a challenging client environment in Germany, the company's largest profit center. The analyst noted that the update was weaker than expected and aligned with concerning macroeconomic reports about the region.
In light of the trading update, RBC Capital has revised its earnings per share (EPS) estimates for fiscal years 2024 and 2025 downwards by 11-12%. Even with these reductions, the analyst expects that Germany will contribute to more than 60% of Hays' group EBITA for the current fiscal year.
Despite the downward revision, RBC Capital sees a longer-term value in Hays Plc. The analyst believes that the company's refreshed strategy, which aims to accelerate margin expansion over the medium term, represents a significant cultural shift and could benefit the company in the long run.
The analyst concluded, "We still see longer-term value in the name and believe the refreshed strategy to accelerate margin expansion over the medium term marks a welcome cultural shift. We lower our PT to 130p." This statement underscores the firm's continued confidence in Hays' strategic direction and potential for future growth.
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