MS cautious on pace of recovery for staffers

Randstad NV

19/03/2024 13:26

** Morgan Stanley is cautious on short-term outlook for
staffers citing sluggish recovery due to risk of further
deterioration in both temporary and permanent placement volumes
in Europe and lower pricing
    ** Continental Europe could see a worsening in the first
half of the year, which would be a drag on growth for the
overall staffing market, it says
        ** PMI remains below 50 in all of the most important
staffing markets, except the U.S., which could be an early
indicator of how slow the upturn is likely to be, MS adds
  
    ** It sees fee rates and bill/pay spread normalization as a
potential risk for staffing companies
    ** It sees limited short-term upside to staffers'
profitability from operating savings initiatives as these only
offset gross margin headwinds and operating deleverage
    ** MS also flags that the competitive nature of the sector
will prevent companies under its coverage from harvesting the
benefits of AI-related productivity gains  
    ** The broker initiates coverage on Adecco  ADEN.S  with
"underweight" and Randstad  RAND.AS  with "overweight" 
    ** MS prefers Randstad citing its higher profitability
profile, healthy balance sheet and ability to return more cash
to shareholders
    ** It remains on the sidelines on Hays  HAYS.L  and
Pagegroup  PAGE.L  due to their higher exposure to the cyclical
permanent recruitment activity business and deteriorating
European landscape, and initiates both with "equal-weight"  
    

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))