Hays growth potential is underestimated, says Barclays

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Hays PLC (LSE:HAS)’s growth potential is underestimated by the market, according to Barclays, which upgraded the stock to ‘overweight’.


Forecasts for 2023 were bumped up by 10% compared to the Bloomberg consensus, as data from Revelio Labs shows high demand for new digital and IT roles across multiple sectors.


READ: Hays says route back to profits growth will be shorter than previously expected


The pandemic has created productivity improvements for net fee per head that can last, plus cost savings have improved margins.


“We see potential for cash returns worth over 25% of the current market cap over the next five years, giving the shares a circa 5% total dividend yield,” analysts said.


“We set a price target of 195p for Hays (circa 20% implied upside), and see further upside to around 250p if management can reiterate their pre-pandemic growth ambitions, implying earnings over 25% ahead of our outer year estimates.”


The recruiter’s London-listed competitor PageGroup (LSE:PAGE) PLC is an ‘equal weight’ with a 730p target price, the bank added.


Both Hays and PageGroup (LSE:PAGE) added 2% to 168p and 629.5p respectively on Thursday at noon.

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