SThree tumbles on Jefferies downgrade to 'hold'
By Michele Maatouk
Date: Friday 07 Jan 2022
(Sharecast News) - Specialist recruiter SThree was under the cosh on Friday after Jefferies downgraded its stance on the shares to 'hold' form 'buy' and slashed the price target to 500p from 650p.
"SThree has sustained strong revenue momentum but additional investment impeded operational gearing in H221F and, unless management's narrative is conservative, will also in FY22F and FY23F," the bank said.
As a result, the £100-120m FY24 EBITA target communicated at the November 2019 capital markets day now appears less achievable, it said.
"We anticipate increased execution risk in 2022 due to infrastructure upgrades (CRM, ERP, etc) and the CEO's unexpected departure.
"Given SThree's seasonal H2 profit weighting, progress may not be evident until the autumn, so a premium to mid-cycle EV/net fees (1.8x) is no longer appropriate."
At 1230 GMT, the shares were down 6.1% at 429p.
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