Liberum cuts target price for Hays after Q1 miss

(Sharecast News) - Liberum has kept a 'buy' recommendation on Hays despite the recruitment firm failing to meeting expectations with its first-quarter results, but has trimmed its target price slightly from 125p to 120p. Hays reported on Thursday that like-for-like net fee income fell by 7% in the fiscal first quarter, below the 5% drop expected by analysts.

Liberum analyst Sanjay Vidyarthi said he has now reduced his full-year EBIT forecasts by 12%, "bringing us more in line with consensus, which had been drifting down into this update".

He says that the EBIT recovery journey "could be a long one", but that Liberum still favours Hays to competitive Page due to its higher exposure to the temp and contract markets.

"Hays' higher temp/contract mix provides a degree more protection through the cycle than Page's perm focus. It is increasingly focusing on higher margin and higher growth segments and driving productivity is key. However, the forecast trajectory needs to pick up before the shares can properly re-rate," Vidyarthi said.

"As things stand, our FY26E EBIT is little more than what was achieved in FY07. Meanwhile, the balance sheet remains strong enough to weather the storm and there is some yield support (FY24E: 5.5%)."

The stock was down 2.2% at 99.9p by midday on Friday.