European staffing firms Randstad and Adecco shed up to 2 percent and could fall as much as 6 percent as increasingly challenging macro conditions weigh on the outlook for the sector, according to Credit Suisse.
Credit Suisse downgrades Dutch firm Randstad to ”underperform“ from ”neutral“ and reduces Adecco to ”neutral from “outperform” while cutting 2013-2014 earnings estimates for both companies by 4 percent, citing recent weak PMI data in the U.S. and Europe as reason to be bearish short-term.
Credit Suisse says the PMIs suggest that the recovery in recruitment markets, particularly in Europe, may take longer to come through than they had previously expected.
“Given the close correlation between both temp markets and staffing agency share prices with PMI data, we expect further pressure on both market expectations and share prices in the near term,” Credit Suisse says in a note.
The investment bank says that when U.S. PMI data have fallen 5 points or more, the staffers have only outperformed the market on 1 of the past 11 occasions and have typically underperformed by 6 percent.
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