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WEEKLY TIP INSIGHT: 19th OCTOBER 2018

 

‘Brokers and Tipsters are Increasingly Bullish on UK Recruiters’

 

Recent trading updates have led to disappointing returns in October for two of the UK’s leading recruitment consultancies – Hays (HAY) and PageGroup (PAGE) – yet broker and tipster sentiment towards both is now more positive than at any point during the current year.

A slowdown in the number of senior workers switching jobs affected PageGroup’s UK division, but double-digit growth elsewhere led to an increase in annual profits of over 19%. After a muted market response, shares stand 9.1% lower than they were at the end of September. Both broker and tipster sentiment has increased through the month, however, though a number of tipsters remain cautious about the firm’s prospects.

Royston Wild (The Motley Fool) – who has been bullish about the company for some time – notes that although “its share price may have failed to detonate…it’s still a terrific pick in my opinion”, while Kevin Godbold (The Motley Fool) believes “the strong operational progress we are seeing could go on to drive the shares higher”. HSBC awarded the shares a Buy rating last week, while Liberum Capital and Kepler Cheuvreux took more cautious ‘hold’ stances. Chris Bailey (ShareProphets) offered a contrarian view over the summer; following up on an article in which he declared investors in PageGroup to be “bonkers”, the tipster reaffirmed that “if you own it, I’d sell it and if you don’t….do not go near the shares”.

 

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Shares in Hays have continued to slide through the month and now languish over 20% levels than they changed hands at the end of September. A weaker quarter than expected – announced last week – was caused to some degree by a “fragile macro-picture” by analysts at Interactive Investor.

Sentiment towards Hays PLC has followed a similar pattern to PageGroup through the year, with brokers and tipsters appearing more confident about the ability for Hays to continue growth in future.

Hays has received eight tips since the start of the month, with seven buys and one hold rating. Liberum Capital, UBS and HSBC have all recently awarded Buy ratings, while Kepler Cheuvreux retain a ‘Hold’ outlook. Andy Ross (The Motley Fool) considers the recent steep fall in share price to be an “attractive entry point for investors, especially given the company’s strong performance outside the UK”. The last ‘Sell’ ratings for the recruiter came from Deutsche Bank back in March.

 

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Disclaimer: The contents of this article should not be considered financial advice. Returns used in this analysis are expressed as price returns. All information displayed as at 17th October 2018.





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