Deutsche Bank has repeated a Buy rating on Hays (LSE:HAS) and raised its price target to 60p, implying substantial upside from the recruiter's last close of 42.9p.
Analyst Steve Woolf's bullish call centres on a clearer improvement in trading momentum at the FTSE 250-listed staffing group, whose group net fees fell 5% year-on-year on a like-for-like basis in the fourth quarter, an easing from declines of 8% in the third quarter and 10% in the second, and ahead of the company-compiled consensus forecast of a 6% drop.
The analyst attributes the outperformance to consultant productivity rising 8%, improving momentum in the rest-of-world division including the United States, and robust growth from enterprise customers, noting temp and contracting fees fell just 3% against a steeper 7% decline in permanent placements; management told Woolf that roughly 30% of the business has returned to growth, up from about 20% in the prior period, with net cash standing at £20m at period end.
Woolf's upgraded target follows Hays' broader rationalisation drive, which has already delivered roughly £50m of annualised structural cost savings, three years ahead of the group's original schedule, ahead of full-year results scheduled for 20 August.
