On Thursday, Deutsche Bank adjusted its financial outlook for FDM Group Holdings Plc (FDM:LN) stock, a professional services company, by increasing its price target from £3.65 to £4.30 while keeping a Hold rating.
The decision comes after FDM Group reported a significant downturn in its interim financial results, with a 22% drop in revenues and a 32% fall in adjusted EBIT (earnings before interest and taxes).
The company has experienced a steady decrease in the number of consultants at client sites, dropping from a high of 4,905 at the end of the fiscal year 2022 to 3,469 at the end of the first half of 2024.
This figure aligns closely with the levels seen at the end of the fiscal year 2020. The decline is attributed to clients deferring decisions and implementing hiring freezes amid challenging market conditions.
Despite the downturn, FDM Group's cash reserves remain a strong point. The company reported period-end cash of £36.9 million, with no debt, which positions it favorably against smaller competitors that lack similar financial stability and the capacity for scalability. The interim dividend was declared at 10.0 pence per share, a decrease from the previous 17.0 pence.
Management at FDM Group has confirmed its full-year guidance, despite the challenging environment. Deutsche Bank noted that only minor adjustments have been made to their forecasts following the company's reiteration of its yearly expectations. The bank's revised price target reflects these considerations and the current financial health of the company.
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