On Monday, RBC Capital Markets adjusted its financial outlook for Hays Plc (HAS:LN) (OTC: HAYPF), a leading global professional recruiting group. The firm's analyst revised the share price target downward to GBP1.10 from the previous target of GBP1.25, while still holding an Outperform rating.
The revision follows a reassessment of the company's earnings projections for fiscal years 2025 and 2026. The analyst from RBC Capital indicated a significant reduction in the earnings per share (EPS) estimates for Hays Plc, with a decrease of 21% for FY25 and 36% for FY26. This adjustment is attributed to a delay in the expected recovery of staffing activity.
Despite the lower earnings forecast, the analyst noted only a modest change in the net fee growth assumptions for Hays Plc. However, the company's strategy to maintain its capacity amid market uncertainties is anticipated to result in notable short-term operating leverage challenges.
The new price target represents an approximate 12% decrease from the previous target. The analyst's statement emphasized that the revised estimates and price target are more aligned with the consensus, suggesting a cautious yet still optimistic view of the company's potential performance.
Hays Plc's commitment to preserving capacity, despite the near-term financial impacts, is seen as a strategic move to position itself favorably for future market recoveries. The Outperform rating indicates that RBC Capital Markets expects Hays Plc's stock to perform better than the average return of the stocks the firm covers over the next 12 months, despite the adjustments to the financial forecasts.
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