- Hays
- 08 April 2025 09:32:27
Source: Sharecast
The bank lifted Hays to ‘equalweight’ and trimmed the price target to 66p from 68p.
Morgan Stanley previously had an ‘underweight’ rating on the shares as it saw risk from Hays' large exposure to Germany combined with a weaker balance sheet and higher likelihood of a dividend cut.
"While these risks remain, we think they are now better reflected in the valuation, and our price target implies limited further downside," it said. "We therefore neutralise our rating."
More broadly, the bank said that new US tariffs announced last week and the associated uncertainty will push out any recovery for staffers, with risk clearly tilted to the downside.
"Given staffers' large exposure to manufacturing/ autos/logistics and the impact of tariffs implemented in the past, we see downside to organic growth expectations," it said.
"Although the full impact of tariffs and potential reciprocal measures is unclear at this stage, we revise our estimates and price targets to reflect increased uncertainty pushing out a recovery, and we now see circa 5%/-10% downside to consensus 2025/26 EPS estimates across our coverage.
"We do not assume a recession in our base case, but reflect this outcome in our bear case."
Morgan Stanley cut its price target on equalweight-rated PageGroup to 285p from 300p.
The bank cut its price target on Adecco to CHF19.50 from CHF21.00 and on Randstad to €34.50 from €39.00.
It said Adecco has outperformed the rest of its staffing coverage year-to-date, narrowing the EV/sales discount to Randstad.
"The two now trade in line on EV/EBIT and dividend yield (despite Adecco's higher leverage) supporting our relative preference for Randstad," the bank said. "While the market has started to price in increased uncertainty in recent days, we do not think 9.5x EV/EBIT fully reflects the headwinds (our price targets assume 7.5x)."
With Hays and PageGroup both still trading on "rich" valuations, "we stay on the sidelines," it added.